Key Takeaways:
- Federal Reserve Chairman Jerome Powell says bitcoin is not a “financial stability concern”
- He also highlights the need for a regulatory framework over cryptocurrencies
Federal Reserve Chair Acknowledges Bitcoin
The US Federal Reserve ruled in favor of cryptocurrencies like bitcoin in its final press conference for 2021. Chairman Jerome Powell appeared for the conclusion of the Fed’s meeting and presented a rather warm stance toward bitcoin and crypto assets.
Mr. Powell provided a soothing response to a question if he was worried about what was happening in the crypto space.
“I think the concerns are not so much current financial stability concerns,” the Chairman said. Instead, he continued, there is a need for “proper regulation” over the fast-developing cryptocurrency market. “The public relies on the government to make sure the payments system is safe and reliable,” he added.
As he said he believes cryptocurrencies like bitcoin are risky, he advised consumers to “understand what they’re getting.” In conclusion, he said that “there are certainly developments in the [crypto] markets that are worth following.”
Bitcoin Price Gains 5%, Adoption Expected to Grow
As a result of Chair Powell’s speech, the price of bitcoin jumped over 5% to reach levels near $50,000 per coin. In that context, traders and investors saw bright prospects for mainstream bitcoin adoption as they rushed to buy the dip.
The US Federal Reserve is not actually responsible for making sure the cryptocurrency market is operating under certain rules and guardrails. The weight of regulating digital currencies falls on the Securities and Exchange Commission (SEC). Headed by crypto-expert Gary Gensler, the SEC is now working alongside Congress to implement a regulatory framework over crypto markets in the US.
This said, both the Fed and the SEC have said they are open to embracing cryptocurrency as a new market and an asset class. Moreover, surging demand for bitcoin from banks and traditional finance boosts the chances for an accommodative stance by financial watchdogs.
As the year comes to an end, market participants are looking with elevated excitement into 2022. Major developments, including the continued expansion of crypto and increased acceptance, are likely to remain the driving force of the market.