Federal Reserve Chair Jerome Powell has reaffirmed the U.S. central bank’s stance on Bitcoin ownership, stating that the Federal Reserve is not legally permitted to hold the cryptocurrency. Speaking after the Fed’s latest policy meeting, Powell explained that the Federal Reserve Act explicitly defines the types of assets the central bank can own, and Bitcoin is not on the list.
Powell made it clear that he has no plans to push for changes to these laws, reinforcing the Fed’s commitment to its current framework. He described Bitcoin as a speculative asset, likening it more to gold than to the U.S. dollar, and highlighted its volatility as a key reason for the central bank’s cautious approach.
Trump’s Strategic Bitcoin Reserve Proposal Sparks Debate
The conversation around Bitcoin’s potential role within national economic strategy gained traction following President-elect Donald Trump’s proposal to create a strategic Bitcoin reserve. The idea has drawn mixed reactions, with advocates seeing it as a step toward financial innovation and critics warning of risks associated with Bitcoin’s unpredictable nature. Powell, however, dismissed any immediate need for the Fed to integrate Bitcoin, reflecting a more conservative outlook.
Crypto Market Reacts Sharply to Powell’s Remarks
Jerome Powell’s comments triggered an immediate downturn in the crypto market. Bitcoin’s value plummeted by 5.9%, while the global cryptocurrency market lost 7.6% in capitalization. This sharp reaction underscores the sensitivity of the market to regulatory signals and the central bank’s reluctance to embrace Bitcoin as a strategic asset.
The Federal Reserve’s Stance: What Does It Mean for Bitcoin?
The Federal Reserve’s firm position underscores the challenges Bitcoin faces in gaining mainstream institutional acceptance. While Bitcoin is increasingly viewed as a hedge against inflation by private investors and corporations, central banks, including the Fed, remain cautious. This raises critical questions about whether other nations might lead in adopting Bitcoin or if the U.S. will eventually reconsider its position as the market evolves.
Bitcoin’s future as a strategic asset depends on its ability to address regulatory concerns and stabilize its value. For now, the Federal Reserve remains focused on traditional financial instruments, leaving Bitcoin to thrive—or falter—in the private sector.
