New York, USA – Federal Reserve Chair Jerome Powell dismissed the idea of the U.S. central bank supporting a Strategic Bitcoin Reserve, citing legal and regulatory limitations during a press conference following the Fed’s recent policy meeting.
Addressing growing speculation about central bank involvement in cryptocurrency, Powell stated:
“We’re not allowed to own bitcoin. That’s the kind of thing for Congress to consider, but we are not looking for a law change at the Fed.”
The comments come amid discussions of a potential U.S. Strategic Bitcoin Reserve, proposed by President-elect Donald Trump, who has expressed pro-crypto sentiments.
Trump suggested that such a reserve could start with 200,000 bitcoins seized from criminal activities, worth approximately $21 billion at current valuations.
Republican Senator Cynthia Lummis has introduced a bill advocating for the creation of the reserve, which would involve the U.S. Treasury purchasing 200,000 bitcoins annually until it reaches a stockpile of one million tokens. Funding for the purchases would reportedly come from Federal Reserve bank deposits and gold reserves.
However, analysts warn that the plan would likely face significant resistance from the Fed and require Congressional approval.
“Funding such a reserve would necessitate new Treasury debt issuance and would likely spark intense debate in Congress,” according to a report by Barclays.
Bitcoin, currently valued at over $100,000, has seen a sharp rise in price following Trump’s pro-crypto stance. Despite its popularity, the asset remains highly volatile, limiting its utility as a reserve currency or a store of value.
“Bitcoin’s volatility over its 15 years of existence makes it a risky proposition for a reserve currency,” analysts note.
Powell highlighted the Fed’s cautious approach to cryptocurrencies, stating that its primary focus remains on their impact on consumer safety and the banking sector.
“We regulate and supervise banks, and we would want the interaction between the crypto business and the banks not to threaten the health and well-being of the banks,” Powell said.
He also reiterated that while the Fed does not regulate cryptocurrencies directly, it monitors their implications on financial stability.
As part of his incoming administration, Trump plans to appoint David Sacks, a former PayPal executive, as the White House AI and Crypto Czar. Additionally, pro-crypto consultant Paul Atkins is expected to lead the Securities and Exchange Commission (SEC).
These appointments signal a potential shift in U.S. policy toward embracing cryptocurrency and blockchain innovation, even as federal agencies like the Fed adopt a more measured stance.
While Powell’s remarks cast doubt on the feasibility of a Strategic Bitcoin Reserve, Trump’s pro-crypto agenda and legislative efforts could keep the idea alive. As debates over digital assets and their role in the global economy continue, the balance between innovation and regulation will remain a contentious issue for policymakers and market participants alike.
