Powell Says Fed Not Allowed to Stockpile Bitcoin, Impairing Bitcoin

 

Federal Reserve Chair Jerome Powell said on Wednesday (Dec. 18) that the US central bank has no intention of accumulating Bitcoins.

 

On Wednesday, the Fed concluded its policy meeting by announcing a 25-basis-point rate cut, as expected, and implying an indefinite path for future short-term monetary policy. In the post-meeting press conference, Jerome Powell said that the Fed does not want Bitcoin collection or involvement in addressing any legal issues related to Bitcoin holdings.

 

Powell's comments devalued Bitcoin which has risen largely with other crypto assets since Trump's victory.

 

In 2024, Bitcoin has more than doubled on optimism over Trump's support for cryptocurrencies. He promised loose crypto regulation and a US Bitcoin strategic reserve. However, analysts emphasized that Bitcoin trades over the past 15 years have proven its volatility, reducing its eligibility as a reserve currency.

 

About the Bitcoin reserve, Republican Senator Cynthia Lummis proposed a bill stating that the US Treasury Department would purchase 200,000 Bitcoins per year until they reached 1 million tokens. The purchases would be financed by the Fed deposits and gold reserves.

 

Barclays (LON: BARC) reported this week that funds for purchase would demand congressional approval and new Treasury bond issuance. In this case, it is reasonable to suspect that the Fed will strongly resist a bitcoin reserve program.

 

Broadly speaking, Fed officials are skeptical about securities like Bitcoin as they move away from generating digital dollars and toward permitting the private sector to create payment technology. The Fed currently focuses on the impact of cryptocurrencies on the security of consumers and banks.

 

As for Trump, he plans to assign former PayPal (NASDAQ: PYPL) executive David Sacks to the White House AI and Crypto Czar and pro-cryptocurrency Paul Atkins to head the US Securities and Exchange Commission.