The Federal Reserve chairman believes that cryptocurrencies are “really vehicles for speculation” and “No one is using them for payments.” He then compared crypto to gold. His comments about cryptocurrency followed Coinbase’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 Coinbase’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, “We think of them more as crypto assets,” Powell said, adding:
What people call cryptocurrencies, they’re really vehicles for speculation. No one is using them for payments, for example, like the dollar.
The Fed chair proceeded to compare cryptocurrency to gold in terms of how it is used for speculation. “For thousands of years, human beings have given gold a special value that it doesn’t have,” he said. “Nonetheless, for thousands of years, they have done that.” Noting that bitcoin and cryptocurrencies “are much more like that,” Powell emphasized, “They’re not really being actively used as payment.”
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Powell’s comments about cryptocurrency echoed the statements by the new Treasury Secretary Janet Yellen. She said in February that bitcoin was a “highly speculative asset.” She also noted that it is not “widely used as a transmission mechanism” and is an “extremely inefficient way of conducting transactions.”
In February, Powell said that the digital dollar is a “very high priority project for us.” Last month, the Fed chair said cryptocurrency is “essentially a substitute for gold, rather than for the dollar.” He emphasized: “the public needs to understand the risks. The principal thing is there’s the volatility. There’s also the outsized energy requirement for mining, and the fact that they’re not backed by anything.”
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