During a testimony before the House of Federal Service Committee on Wednesday, Jerome Powell, the Chairman of the Federal Reserve, the Central Bank of U.S said that cryptocurrencies are great if you are trying to hide money or launder money.
During the testimony, he was questioned on what he thinks about cryptocurrencies. To which, he replied that cryptocurrencies are not big enough a threat for the financial stability. He said that they have to be conscious that they are being used to hide or launder money.
Powell claims that investors invest based on the assets’ price rise whereas there is no promise behind the product. According to him, cryptocurrency is not a currency as they do not have an intrinsic value. There are issues in terms of investor consumer protection as there is significant investment risk associated with cryptocurrencies.
Moreover, the Federal Reserve is not looking at cryptocurrencies. The Chairman’s main concern is that cryptocurrencies do not have a store of value. The basis of currencies is that it is supposed to be a means of payment and a store of value and cryptocurrencies are not used for payments. Usually, people sell their cryptocurrency and then pay in U.S Dollars and in terms of store value, cryptocurrencies have high volatility.
This is not the first time Jerome Powell has shown his disdain towards cryptocurrencies. Last year, during the testimony as a nominee for the Federal Reserve Chairman before the Senate Banking Committee, Powell was asked about his opinion on cryptocurrency and blockchain technology. He pointed out that Bitcoin’s market value is more than that of 29 out of the 500 S&P Corporations in the US.
During the testimony with the Senate Banking Committee, Jerome Powell said:
“Another bubble that is some four or five times the dotcom bubble of the 90s.”
However, Powell had stated that cryptocurrencies don’t really matter as they are not big enough. He said that cryptocurrencies do not have the volume for it to matter and in the “long long run”, cryptocurrencies of that nature could matter.
Moreover, in the month of January 2018, the Federal Reserve chairman speaks about cryptocurrency and blockchain technology. During his speech in Yale Law School, Powell shows interest in blockchain and Bitcoin’s role in distributed ledger technology. He stated that the DLT, in the long run, would render parts of the banking and payment system obsolete. He also adds that there is a need for standardization and interoperability across various versions of distributed ledger technology and a proper legal structure is required for the regulation of the network.
Joshua Fausset, a Youtuber commented:
“What currency in the history of mankind is any better at hiding illegal activity than the US dollar? What currency has been devalued any greater over time than fiat currencies, such as the US dollar? The establishment is living in their own dream world they don’t want to see end. As long as the public stays asleep, the dream will continue.”
WonderfulInflation, another Redditor replied to a comment which stated that the Feds is working in their best interests and not the peoples:
“Regardless of their intention with crypto, the alternative reality we live in is a lot bleaker. The status quo is failing and people won’t realise it as long as new artilces exist claiming Bitcoin is dead. Even for people that aren’t interested in crypto there is a story there.”
He further adds:
“Why is Bitcoin continually dying (showing how fucking hard it is to kill) while banks are too big to fail? On one hand we have someting we try to abuse and destroy (Bitcoin) and on the other we have a leagacy system that refuses to be accountable and claims to be invincible (too big to fail). I wonder which of the two is doing more harm to the world economy.”
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