While Bitcoin (BTC) is too volatile to have money and ‘is not supported by anything, it can be a’ substitute for gold ‘, the US Federal Reserve chairman said.
Jerome Powell on Monday at an event hosted by the Bank for International Settlements, or BIS, in response to a question about cryptocurrency.
Powell Matters Supporting Bitcoin
Asked if he believes Bitcoin and other cryptocurrencies pose a threat to financial stability, Powell dispelled well-known arguments that have long come from the legacy of financial figures.
“Crypto-assets – we call them ‘crypto-assets’ – they are very volatile – see Bitcoin – and are therefore not really useful as a valuable store, and are not supported by anything,” he said.
“It’s more of an asset for speculation, so it’s not used primarily as a means of payment. It’s more of a speculative asset. It’s essentially a substitute for gold rather than the dollar.”
Powell’s words offer some of the most direct Fed opinions on Bitcoin that have been made public in recent times and build on a perspective offered in 2019. They also come weeks after the next finance minister, Janet Yellen, clarified her reservations about decentralized cryptocurrencies.
As with Yellen, Powell has apparently unleashed a burst of negative market sentiment, with BTC / USD falling nearly $ 1,000 after its reaction.
Despite all their differences, Powell and Bitcoin’s biggest proponents agree on the status of the cryptocurrency as a new form of gold.
The verdict could become difficult for gold bugs that are hostile to Bitcoin, especially Peter Schiff, who still claims that fate is on his side. in terms of generational stores of value.
Fiat has ‘public benefit in mind’
Together with the general manager of BIS, Augustin Carstens and Jens Weidmann, president of the German Federal Bank, Powell also looked at stable currencies because they are related to the continuing trend of central bank’s digital currencies, CBDCs.
Here the talks were less unusual, and the speakers repeated well-known views on the separation of private stable coins and CBD ministries operated by the bank.
“To the extent that a stable currency is backed by sovereign currencies of leading countries, it is definitely an improvement in cryptocurrencies, I would say,” Powell continued.
“But nonetheless, where does the credibility come from? It comes from the sovereign currency that is the backstop.”
He said Fiat currencies would be ‘issued to the public’, stressing that stable coins would not be the basis for the global financial system in the future.