Federal Reserve Chair Jerome Powell recently addressed the topic of Bitcoin in light of President-elect Donald Trump's proposal to establish a U.S. Bitcoin Strategic Reserve. Powell stated that the Federal Reserve is legally prohibited from holding Bitcoin and has no intention of seeking legislative changes to alter this restriction. He emphasized that any modifications to the legal framework would be the responsibility of Congress.
This statement has had a notable impact on the cryptocurrency market. Following Powell's remarks, Bitcoin's value, which had been rising after Trump's election, experienced a decline. The proposal for a Bitcoin reserve had generated significant interest, with suggestions that it might begin with Bitcoin holdings seized by authorities. Additionally, Senator Cynthia Lummis introduced a bill advocating for the creation of a Bitcoin reserve, potentially involving resources from the Treasury and the Federal Reserve. However, Powell's comments indicate a lack of support from the central bank for such initiatives.
The Federal Reserve has consistently expressed skepticism regarding cryptocurrencies, focusing on concerns about their stability and implications for consumer and banking sector safety. Powell's recent statements reinforce the central bank's cautious stance toward integrating Bitcoin into its operations or reserves.