Citing legal limitations, Federal Reserve Chair Jerome Powell discounted the likelihood of the central bank hoarding bitcoin in its reserves during a news conference following a recent rate cut. When asked about the U.S. government creating a bitcoin reserve, Powell underlined that the Federal Reserve Act controls what the organisation may acquire and bitcoin is not included.
“We’re not allowed to own bitcoin,” Powell declared. “We are not seeking a legislative reform; the Federal Reserve Act specifies what we are allowed to acquire. Congress should take that into account, but at the Fed we are not looking for any legislative amendment.”
This posture captures Powell’s continuous wary attitude towards cryptocurrency. In other remarks, he has called bitcoin a speculative asset and attacked its volatility, claiming it lacks the stability needed to operate as a legal currency. Powell warned about the dangers cryptocurrencies create to investors and financial systems and said in 2021 they are “not really useful as a store of value”. He also distinguishes between central bank digital currencies (CBDCs) which he characterises as safer and more under control than distributed cryptocurrencies like bitcoin.
The Federal Reserve Act confines central bank holdings to U.S. government bonds and other very safe assets. Although the Fed has occasionally increased its asset purchases during recessionary times—like the 2008 financial crisis—coins remain outside of its purview. Legislative initiatives aiming at including bitcoin into the U.S. financial system, such Senator Cynthia Lummis’ Bitcoin Act, have faced strong opposition notwithstanding their intentions. Issues about crypto control and possible abuse have kept such projects on the margins.
On the other hand, President-elect Donald Trump has presented a daring proposal to create a national bitcoin reserve, therefore placing the United States as a leader in the field of cryptocurrencies. The project entails amassing significant bitcoin interests, maybe beginning with assets taken from criminal investigations. This declaration has had a major impact on the bitcoin market since investors hope for favourable legislative changes under the next government, therefore increasing the value of bitcoin past $100,000.
Emphasising even further Trump’s dedication to digital assets, he has named David Sacks the White House AI and crypto czar This action marks a possible change in the way the U.S. government handles digital assets since it shows an attempt to include blockchain and bitcoin technologies into the national economic agenda.
