Jerome Powell Says Federal Reserve Cannot Hold Bitcoin, Not Looking To Change That
Federal Reserve Chair Jerome Powell has said the central bank does not intend to be involved in any government effort to stockpile and create a Bitcoin strategic reserve.
Powell said the Federal Reserve is not allowed to own Bitcoin and is not looking to change that.
Fed Cant Own Bitcoin
Powell commented in response to a question on whether he saw any value in a Bitcoin strategic reserve. President-elect Donald Trump has promised to create a Bitcoin strategic reserve to stay ahead of the competition as other countries embrace crypto. Powell stated the Fed is not allowed to own Bitcoin and is not looking for a law change.
Were not allowed to own Bitcoin. The Federal Reserve Act says what we can own, and were not looking for a law change. Thats the kind of thing for Congress to consider, but we are not looking for a law change at the Fed.
Powells comments adversely impacted the price of Bitcoin, which fell sharply. Experts have warned of the risks associated with volatile assets like Bitcoin. Bitcoins value has skyrocketed following Trumps election victory and the prospect of a crypto-friendly administration. Trump has repeatedly stated he will create a Bitcoin strategic reserve, a concept n rejected in Europe.
However, the President-elect has provided no details on what the reserve would entail, only saying initial holdings could include seized Bitcoin, a stockpile of 200,000 tokens worth $21 billion at current prices. Bitcoin has doubled this year, creating history when it crossed the $100,000 mark.
A Bitcoin Strategic Reserve
Plans to create a strategic reserve are already underway, with Republican Senator Cynthia Lummis introducing a bill proposing a reserve. The bill proposes the US Treasury buy 200,000 Bitcoin annually until its stockpile reaches 1 million. According to the bill, Fed bank deposits and gold holdings would fund the purchases. Analysts from Barclays believe funding a strategic reserve would require the approval of Congress and the issuance of new Treasury debt. The analysts also expected such a plan would face stiff opposition from the Federal Reserve.
Fed Cautious On Rate Cuts
As expected, the Fed cut interest rates by 25 basis points. However, it also revised its outlook for rate cuts in 2025, indicating only two reductions instead of the four forecast in September. Powell stated the central bank would be looking for progress on inflation, adding that consumers are feeling the effects of high prices rather than high inflation.
We have been moving sideways on 12-month inflation. We understand very well that prices went up by a great deal, and people really feel that, and its prices of food and transportation and heating your home and things like that. So theres tremendous pain in that burst of inflation that was very global. Now we have inflation itself is way down but people are still feeling high prices and that is really what people are feeling.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
Text source: Crypto Daily™
