Jerome Powell Says Federal Reserve Cannot Hold Bitcoin, ‘Not Looking To Change That’

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As a seasoned crypto investor with over a decade of experience in the volatile world of digital assets, Powell’s comments on the Federal Reserve’s inability to own Bitcoin were a stark reminder of the ever-changing landscape of this industry. I have seen Bitcoin’s value soar and plummet countless times, often influenced by the slightest hint of regulatory action or political rhetoric.

According to Chair Jerome Powell, the Federal Reserve will not participate in any government plans to accumulate and develop a strategic hoard of Bitcoins.

Powell said the Federal Reserve is not allowed to own Bitcoin and is not looking to change that.

Fed Can’t Own Bitcoin 

In response to being asked if he found merit in establishing a Bitcoin strategic reserve, Powell indicated that, under current regulations, the Federal Reserve does not possess the authority to hold Bitcoin and has no intention of advocating for a legislative change to allow it. Donald Trump, the President-elect, has expressed his plans to create such a reserve as a means of maintaining a competitive edge, given other nations’ growing interest in cryptocurrencies.

As a crypto investor, I’m currently bound by the regulations set forth in the Federal Reserve Act, which dictates the types of assets I can own. At this time, I’m not actively seeking a change in these laws. That said, I understand that such matters are within the purview of Congress to consider, but for now, I’m content with the existing framework.

Powell’s remarks negatively influenced the price of Bitcoin, causing it to drop significantly. Cautions have been issued about the dangers inherent in volatile assets such as Bitcoin. The value of Bitcoin has soared after Trump’s election win and the expectation of a pro-crypto administration. Trump has frequently expressed his intention to establish a strategic Bitcoin reserve, an idea that has been rejected in Europe.

Despite the President-elect not disclosing specifics about the nature of the proposed reserve, he hinted that it might contain Bitcoin seizures, with an initial investment of around 200,000 tokens, valued at approximately $21 billion at present prices. Notably, the value of Bitcoin has more than doubled this year, making headlines as it surpassed the $100,000 mark for the first time.

A Bitcoin Strategic Reserve 

Already in progress are plans to establish a strategic Bitcoin reserve, initiated by Republican Senator Cynthia Lummis through the introduction of a bill. This bill suggests that the US Treasury should purchase 200,000 Bitcoins each year until the accumulated amount reaches one million. As stated in the bill, the funds for these purchases would come from Federal bank deposits and gold reserves. Analysts from Barclays anticipate that setting up a strategic reserve would necessitate Congress’ approval and potentially the creation of new Treasury bonds. They also predict strong resistance to this plan from the Federal Reserve.

Fed Cautious On Rate Cuts 

In line with my anticipations, the Federal Reserve reduced interest rates by a quarter point, as announced. Yet, what caught my attention was their revision of the projected rate cuts in 2025, now predicting only two reductions instead of the four originally forecasted back in September. Chairman Powell clarified that the central bank will be monitoring progress on inflation closely. He emphasized that consumers are experiencing the impact of high prices more so than high inflation at this point.

For the past year, our inflation progress has been somewhat horizontal rather than forward. This significant increase in prices, particularly for food, transportation, utilities, and housing costs, is something we’re all too aware of. The global surge in inflation caused a lot of discomfort. Although inflation rates have dropped significantly now, people are still grappling with high prices. This persistence of high costs is what the public is experiencing.

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2024-12-19 21:03