The Federal Reserve chairman believes that cryptocurrencies are â€œreally vehicles for speculationâ€ and â€œNo one is using them for payments.â€ He then compared crypto to gold. His comments about cryptocurrency followed Coinbaseâ€™s direct listing on Nasdaq.
Fed Chair Powell Thinks Crypto Is for Speculation
Federal Reserve Chairman Jerome Powell talked about cryptocurrency in an interview with The Economic Club of New York on Wednesday. The event took place amid Coinbaseâ€™s IPO via a direct listing on Nasdaq.
With the rising popularity of bitcoin and cryptocurrencies, he was asked if he was worried about the impact they may have on the economy and the ability for people to use them as payments. Firstly, â€œWe think of them more as crypto assets,â€ Powell said, adding:
The Fed chair proceeded to compare cryptocurrency to gold in terms of how it is used for speculation. â€œFor thousands of years, human beings have given gold a special value that it doesnâ€™t have,â€ he said. â€œNonetheless, for thousands of years, they have done that.â€ Noting that bitcoin and cryptocurrencies â€œare much more like that,â€ Powell emphasized, â€œTheyâ€™re not really being actively used as payment.â€
Powellâ€™s comments about cryptocurrency echoed the statements by the new Treasury Secretary Janet Yellen. She said in February that bitcoin was a â€œhighly speculative asset.â€ She also noted that it is not â€œwidely used as a transmission mechanismâ€ and is an â€œextremely inefficient way of conducting transactions.â€
In February, Powell said that the digital dollar is a â€œvery high priority project for us.â€ Last month, the Fed chair said cryptocurrency is â€œessentially a substitute for gold, rather than for the dollar.â€ He emphasized: â€œthe public needs to understand the risks. The principal thing is thereâ€™s the volatility. Thereâ€™s also the outsized energy requirement for mining, and the fact that theyâ€™re not backed by anything.â€
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