Jerome Powell Confirms the Federal Reserve Has No Authority to Hold Bitcoin

Speaking at a policy forum, Powell addressed the growing questions about the Federal Reserve’s role in managing digital currencies amid the global rise of cryptocurrencies.

The Federal Reserve does not have the authority to hold Bitcoin or any other cryptocurrency, and there are no immediate plans to change that, Federal Reserve Chair Jerome Powell said Friday.

Speaking at a policy forum, Powell was asked about the Fed’s role in managing digital currencies, given the global rise of cryptocurrencies.

“The Federal Reserve does not have the authority to hold Bitcoin or any other cryptocurrency, nor are there plans in place to change that,” Powell said.

This comment comes at a time when central banks around the world are exploring digital currencies. However, Powell said that Bitcoin and similar assets, which are privately issued and decentralized, differ fundamentally from the Federal Reserve’s goals and responsibilities.

“Bitcoin is speculative and operates outside of the regulatory framework that guides traditional financial systems,” Powell said. He further said that the Fed’s focus remains on ensuring monetary stability and regulating the traditional banking sector.

Powell also highlighted the distinction between cryptocurrencies like Bitcoin and a potential central bank digital currency (CBDC). While Bitcoin operates on a decentralized network without any governing authority, a CBDC would be issued and regulated directly by the Federal Reserve.

The Fed has been researching the feasibility of a digital dollar, though Powell has maintained that any rollout would require careful consideration and Congressional approval.

“A CBDC is fundamentally different from Bitcoin. It is a liability of the central bank and designed to coexist with cash and other forms of money,” Powell said.

Powell’s remarks come amid growing interest in cryptocurrencies from both retail and institutional investors. While the Federal Reserve is limited in its ability to directly engage with cryptocurrencies, its monetary policies and regulatory actions can still have an indirect impact on the crypto market.

As the regulatory landscape for cryptocurrencies continues to evolve, it remains to be seen whether the Fed will eventually expand its role in this emerging asset class.