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Sometimes, no news is good news.
Though often loud and vocal, what we haven’t heard from The U.S. Federal Reserve are its views against cryptocurrencies. The Fed, though not publicly favoring it, isn’t willing to go as far as saying crypto is bad. What’s bringing the agency into headlines now are its chairman’s remarks when asked about the fate of cryptocurrencies.
Federal Reserve Chairman, Jerome Powell, in a hearing with major bankers, spoke forwardly.
Who Is Jerome Powell?
He is an executive of the U.S. central bank.
If the U.S. Dollar ever existed as crypto, Jerome Powell would set and announce its interest rates. His public announcements can move markets if he reveals enough information about how rates will change.
According to Powell, his agency is more focused on privacy than getting a crypto Dollar started. His words, however, don’t paint a negative picture—just one of delay.
If his central bank adopted crypto, we’d first need complete anonymity in place. When you consider the risk being that a central authority will own the blockchain, privacy is the issue.
During his testimony at a recent hearing, Jerome said,
“… that the government would see all your transactions,
that’s just something we would not stand for
or do or propose here in the United States.”
As we break down the words, we don’t find any hints of an agenda against crypto’s growth.
The “privacy,” instead, deals with anonymity, something cash can still achieve today. At least, this is what investors might glean from the words of a chairman known to “drop clues.”
“No Recommendation for Adopting CBDCs?
A “central bank digital currency” is a cryptocurrency issued by central banks.
Currently, the money of each country is governed by each nation’s own central bank. These banks decide on how much a currency flows and will also decide if CBDCs ever circulate. When Jerome Powell says that there are “no recommendations” he’s speaking of a lack of application or utility.
In the youth of crypto and blockchain, the Federal Reserve, which is the USA’s central bank, hasn’t assessed enough utility to make it a feasible upgrade into its monetary policies.
There is still a lot to be discovered, leaving the Fed chairman without a definitive “no.”
In Response to Recurring Issues
Among the central issues being debated in lieu of CBDCs, you’ll find:
– Privacy—Since crypto works on blockchain, the keys and accounts of a government blockchain, technically, belong to the government, creating privacy issues that negate why crypto exists.
– Monetary Policies—Fed members have essentially said that there’s no solutions on the table for how a CBDC works in a government’s fiscal policies. There’s no framework for it yet.
– Banking—With traditions that are still effective, the banking system has to reevaluate itself as an industry if CBDCs are ever adopted. This could call for years more in the making …
As investors keep their eye on the market, reporters are aligning Jerome’s recent remarks with updates on FTX’s CEO, Sam Bankman-Fried. What the market is focused on is the value of FTX if it gets legal clearance to consolidate its debts.
