No Bitcoin for the Fed: Powell Clarifies Central Bank’s Position

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Federal Reserve Chair Jerome Powell clarified on Wednesday that the U.S. central bank has no intention of participating in any government effort to stockpile large amounts of bitcoin. "We’re not allowed to own bitcoin," Powell stated during a press conference following the Fed's latest policy meeting, where rates were cut as expected, and the path for future monetary policy was left uncertain.

Powell addressed the potential for central bank involvement in a proposed U.S. Strategic Bitcoin Reserve, a concept that emerged following President-elect Donald Trump's victory. Trump has suggested creating a U.S. bitcoin reserve, which could include bitcoin seized from criminals, amounting to approximately 200,000 tokens worth $21 billion at current prices. However, Powell emphasized that legal questions about holding bitcoin are for Congress to address, not the Fed.

Trump's pro-crypto stance has fueled a rally in bitcoin, which has more than doubled this year, reaching over $100,000. However, analysts warn that the asset’s volatility limits its utility as a store of value or a currency. Republican Senator Cynthia Lummis has introduced a bill for the U.S. Treasury to purchase 200,000 bitcoins annually until it accumulates one million tokens, funded by Fed bank deposits and gold holdings. But such a proposal could face significant opposition from the Fed and require Congressional approval, with analysts noting the potential difficulty in passing such a plan.

The Fed has also expressed skepticism about assets like bitcoin and has moved away from creating its own digital dollar. Instead, it has allowed the private sector to innovate in payment technologies. Powell reiterated that the Fed’s role regarding cryptocurrencies focuses primarily on ensuring their interactions with banks do not pose a threat to the banking sector’s stability.

While the Fed does not directly regulate crypto assets, Powell highlighted that the central bank monitors their impact on consumer safety and the banking system. Trump's planned appointments of former PayPal executive David Sacks as White House AI and Crypto Czar and pro-crypto consultant Paul Atkins to head the Securities and Exchange Commission indicate a strong push for crypto-friendly policies.

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