What Does the US Federal Reserve Think of Bitcoin?
- Fed Chairman Powell takes a rather dismissive stance on bitcoin
- Federal Reserve yet to decide whether to have its own digital currency
Large Capital Tech Companies Invest In Bitcoin
Bitcoin has been making rounds of approval among the mainstream financial system and the corporate world. This year has brought a massive upswing in support by Wall Street mainstays such as Goldman Sachs, JPMorgan, and Morgan Stanley. Payment giants like Visa, Mastercard, and PayPal are currently working to enable services that allow payments in bitcoin and other crypto assets. In addition, large capital tech companies like Tesla, MicroStrategy, and Square have already invested in the digital asset and now it represents a portion of their balance sheet.
Amid a growing wave of large-scale acceptance, few are those who have opposed the attractive attributes of bitcoin as a means of payment and store of value. Unfortunately for crypto advocates, the US Federal Reserve is one of them. The Federal Reserve is the central bank of the United States and the primary financial regulator. The Fed is responsible for maintaining the money supply system, which could include printing money and lending it to the government. For example, the White House will write the $1,400 checks for Americans as part of the $1.9tn stimulus package, but before that, the central bank would have printed and lent that money to the government. The Fed is empowered to use a wide range of tools to achieve its goals of maximum employment and stable prices.
The Federal Reserve Shares their Thoughts on Bitcoin
The Federal Reserve recently got the chance to share its thoughts on the topic of Bitcoin. Jerome Powell, the Fed chairman, took a hard line on Bitcoin in his recent appearance in a virtual discussion hosted by the Bank of International Settlements. Jerome Powell called bitcoin “a highly volatile” and “speculative asset that’s essentially a substitute for gold rather than for the dollar”. He went further to label crypto assets as “not really useful stores of value” given that “they are not backed by anything” and their prices tend to fluctuate rather heavily.
Mr. Powell said that the Federal Reserve will, at some point, work on its own payments system. On that issue, the Fed chairman is not yet certain whether a central bank digital coin would be practical. “You can expect us to move with great care and transparency with regard to developing a central bank digital currency,” he said.