Federal Reserve Chair Jerome Powell has clarified the Fed's stance on Bitcoin. According to Powell, the U.S. central bank is not permitted to own Bitcoin. This rule remains unchanged, with no plans to push for legal reforms. Powell highlighted that any legislative change regarding Bitcoin ownership by the Fed would be Congress's responsibility.
Discussions about creating a Strategic Bitcoin Reserve have sparked debates. Proposed by President-elect Donald Trump, this reserve would potentially include Bitcoin seized from criminals. The plan envisions accumulating up to 1 million tokens, which would require Congressional approval and new Treasury debt. However, analysts predict strong resistance from the Fed, citing logistical and economic concerns.
Republican Senator Cynthia Lummis has already introduced a bill to facilitate this initiative. The proposal suggests funding the purchases using Fed bank deposits and gold holdings. While the idea seems ambitious, it faces skepticism due to Bitcoin's high volatility and limited use as a reserve currency.
In contrast to the U.S., European central banks have dismissed the notion of Bitcoin becoming a reserve asset. Leading officials, such as Belgium’s central bank governor Pierre Wunsch, argue that Bitcoin lacks the stability needed for reserve currency status. Similarly, ECB policymakers emphasize that while cryptos are assets, they do not function as currency.
Bitcoin's volatile nature remains a critical issue for central banks worldwide. Despite its growing popularity, its instability undermines its potential as a reliable store of value. Powell also noted that the Fed’s role in crypto is limited to ensuring the safety of the banking sector's interaction with crypto businesses.
As discussions on Bitcoin reserves unfold globally, the divide between crypto supporters and skeptics becomes more pronounced. Policymakers are watching closely, but significant hurdles remain before Bitcoin gains broader institutional acceptance.
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