All eyes were on Fed Chairman as he began testifying in front of Senators regarding cryptocurrencies. Powell, who is not a big fan of cryptocurrencies, continued to maintain his stance as he mentioned that cryptocurrencies dint has any intrinsic value and not big enough to create financial stability risks.
Powell’s stance on cryptocurrency
Powell who gave a statement to senators on day two of
“The Semiannual Monetary Policy Report to the Congress” in an open hearing before the Congress said that “relatively unsophisticated investors see the asset go up in price, and they think: ‘This is great; I’ll buy this.’ In fact, there is no promise of that.”
He also went on to say that cryptocurrencies are not real currencies because they have no intrinsic value.
According to Mr. Powell currencies have two primary functions which are that they are means of payments and they are a store of value. According to him, cryptocurrencies have neither as of today they are not really used for payments, as people still sell their cryptocurrencies and pay in dollars and in terms of the store of value, the volatility of it prices don’t let it establish one.
“There are investor and consumer protection issues as well,” Powell said in front of the House Financial Services Committee. He also mentioned that Cryptocurrencies are great if you are trying to hide money or launder money and that there are significant investment risks for people who invest in them.
His statement also included that US Fed Reserve is not looking into issuing its own digital currency and do not have the regulatory authority to deal with cryptocurrencies.
Powell not a big fan of cryptos
This was not the first time Powell spoke against cryptocurrencies. He has also previously testified against cryptocurrencies. Powell previously commented on crypto last November, when he said that a drop in cryptocurrency assets would not destabilize an economy.
He added, however, that
“in the long, long run, cryptocurrencies and things of that nature could matter,” adding that blockchain — bitcoin’s underlying technology — could be something that “may have significant applications in the wholesale payments part of the economy.”
Mr. Powell’s comments do dampen the sentiment towards cryptocurrencies as worlds largest economy turns its back towards cryptocurrencies. There will soon be a range of debates on this statement in days to come and hopefully will change Mr. Powell’s stance on cryptocurrencies at least towards regulating them.
Will US Fed change its stance ever on cryptos? Do let us know your views on the same.