Cryptocurrencies Have “No Intrinsic Value,” Says US Fed Chair Jerome Powellbr>
Jerome Powell, the head of the US Federal Reserve, said bitcoin and other cryptocurrencies have “no intrinsic value” and are only good for money laundering.
Speaking to the House Financial Services Committee on Wednesday, Powell warned Congress that cryptocurrencies presented severe risks to investors and should not be considered real currencies.
“Relatively unsophisticated investors see the asset go up in price, and they think, ‘This is great; I’ll buy this.’ In fact, there is no promise of that. There are investor and consumer protection issues as well,” Powell said. “It’s not really a currency. We’re not looking at this as something that we should be doing … Mainly I have concerns. If you think about what currencies do, they’re supposed to be a means of payment and a store of value basically and cryptocurrencies are not used very much in payment … and in terms of the store of value, if you look at the volatility it’s just not there. They are very challenging because cryptocurrencies are great if you’re trying to hide or launder money, we have to be very conscious of that,””
While there are consumer protection issues, Powell said the crypto market is relatively small to threaten financial stability, and therefore the US central bank has no plans to bring cryptocurrencies under its jurisdiction.
“Federal agencies like the Securities and Exchange Commission and Commodity Futures Trading Commission, as well as state authorities already oversee many crypto-related businesses, and have shuttered some that have operated illegally,” Powell said.
Having said all that, Powell concluded that we live in a time of extraordinary technological change and regulators should be open to new ideas and innovations that will drive economic growth and improvements in the financial system.
In Novermber 2017, Powell acknowledged that “in the long, long run, cryptocurrencies and things of that nature could matter,” adding that blockchain could be something that “may have significant applications in the wholesale payments part of the economy.”