Federal Reserve Chair Jerome Powell noted that existing laws don’t allow the Fed to hold cryptocurrency and reaffirmed it’s stance on Bitcoin reserves. In a post FOMC press conference, Powell stated that the Federal Reserve is barred from purchasing bitcoin under current legislation or adding BTC to a bitcoin reserve.
“The laws are clear: The Federal Reserve can’t hold Bitcoin and has no desire to change the law to change that, Powell said. The remarks came just days after the Fed cut its rate by 25 basis points, the last interest rate adjustment of the year.
Bitcoin Drops Amid Fed Policy Shift and National Reserve Debate
The policy announcement caused bitcoin’s price to react as the coin dropped 2.1% within an hour to trade at around $101,400. Its decline is in harmony with wider market uncertainty following the Fed’s decision to ease monetary policy after months of its misusing that policy to fight inflation.
This is in keeping with Powell’s longstanding position on the subject, which he has again repeated in a number of FOMC briefings. But his latest comments acquire significance as U.S. political dynamics shift. It’s one of Powell’s first public appearances since Donald Trump became the 47th president and the source of heightened interest in Bitcoin at the federal level.
As part of that, his administration proposed a plan to establish a national cryptocurrency reserve a controversial debut which would integrate cryptocurrency into the U.S. financial system. A number of key lawmakers, including staunch BTC advocate Senator Cynthia Lummis, and key industry leaders have supported the proposal.
But not all experts agree. A federal managed Bitcoin reserve ‘would actually put a dent in both global faith and confidence’ in the U.S. dollar, said Castle Island Ventures founding partner Nic Carter. “The problem with introducing a government BTC reserve is signalling weakness in the status of the dollar as the world’s reserve currency,” Carter warned.
The debate does reflect the increasing overlap between cryptocurrency and federal policy, and it raises questions about whether or not BTC role in the global economy will persist.
