Jerome Powell, Chairman of the Federal Reserve, stated on Wednesday that the central bank is not authorized to hold Bitcoin and has no intention of seeking a legal change to do so. This statement, delivered during a press conference, followed inquiries about the potential for a U.S. Bitcoin reserve, a concept proposed by President-elect Donald Trump. Powell’s remarks led to a more than 5% decline in Bitcoin’s price Wednesday afternoon.
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Powell Cites Federal Reserve Act Restrictions on Bitcoin Ownership
Powell explicitly referenced the Federal Reserve Act, emphasizing its limitations on the assets the central bank can hold. He stated, “We’re not allowed to own bitcoin. The Federal Reserve Act says what we can own, and we’re not looking for a law change.” He further indicated that any such modification would be a matter for Congress to consider, not the Federal Reserve. This clear rejection of Bitcoin ownership by the Fed contrasted sharply with Trump’s vision for the U.S. to become a dominant force in the cryptocurrency space.
Trump’s Pro-Crypto Stance Fuels Bitcoin’s Recent Surge
Despite expert warnings about the volatility of cryptocurrencies, Bitcoin’s value has surged dramatically this year, partly fueled by anticipation of a crypto-friendly regulatory environment under the Trump administration. Bitcoin’s price had risen over 125% since the beginning of the year, even reaching a record high above $108,000 earlier in the week before Powell’s comments triggered the price drop.
Trump has openly declared his ambition to make the United States the “crypto capital of the planet and the bitcoin superpower of the world.” He has reinforced this commitment through several actions: partnering with his family on a new cryptocurrency venture, appointing former PayPal executive David Sacks as his “White House A.I. & Crypto Czar,” and nominating known cryptocurrency advocate Paul Atkins to lead the Securities and Exchange Commission.
Bitcoin Price Dips Below $101,000 After Powell’s Statement
Following Powell’s remarks, Bitcoin’s price retreated to above $101,000 on Wednesday afternoon. While still significantly higher than its value at the start of the year, the sudden drop highlights the cryptocurrency’s sensitivity to regulatory pronouncements and underscores the ongoing debate about its role in the global financial system. The contrasting views of Powell and Trump further emphasize the uncertainty surrounding the future of Bitcoin and its regulation in the United States.
This divergence in opinion between the Federal Reserve and the incoming administration sets the stage for potential future clashes regarding cryptocurrency policy. The market’s reaction to Powell’s statement clearly demonstrates the significant influence of regulatory stances on Bitcoin’s price and underscores the importance of monitoring developments in this area for investors. The long-term implications of these conflicting viewpoints remain to be seen, but it is evident that the regulatory landscape will play a crucial role in shaping the future of Bitcoin.
