US central bank: Bitcoin „more of a substitute for gold than for the dollar“.
Jerome Powell reiterates his stance on Bitcoin as a substitute for gold.
Bitcoin (BTC) is too volatile to function as money and is „not pegged to anything“, but it could be a „substitute for gold“, the chairman of the US central bank has said.
At a Bank for International Settlements (BIS) event on Monday, Jerome Powell gave an honest answer to a question about cryptocurrencies.
Powell: Bitcoin not linked to anything
Asked if he believed Bitcoin and other cryptocurrencies posed a threat to Profit Secret financial stability, Powell fell back on familiar arguments long used by financial bigwigs of old.
„Crypto-assets, let’s call them ‚crypto-assets‘, are very volatile, as you see with, say, Bitcoin. So they are not really suitable as a store of value and they are not pegged to anything,“ he said.
„They are more of an asset for speculation, so they are not particularly used as a means of payment. It is more of a speculative asset. It is essentially a substitute for gold and not for the dollar.“
Powell thus expressed the most direct opinion of a Fed official on Bitcoin in recent times. In doing so, he also echoed a perspective voiced back in 2019. A few weeks earlier, new Treasury Secretary Janet Yellen had made clear her concerns about decentralised cryptocurrencies.
As with Yellen, Powell’s words arguably triggered negative market sentiment. The BTC/USD pair fell by almost US$1,000 after his comments.
Despite all the disagreements, Powell and Bitcoin’s biggest supporters at least agree on the cryptocurrency’s status as a new form of gold.
This opinion could hit Bitcoin-hostile gold supporters hard. Especially Peter Schiff, who continues to believe he is in the right when it comes to generational store of value.
Fiat provides for „common good“
Together with BIS Director General Augustin Carstens and Jens Weidmann, President of the Deutsche Bundesbank, Powell also looked at stablecoins in the context of the current trend towards central bank digital currencies (CBDCs).
Here, the talk was less unusual, as the speakers reiterated already familiar positions related to the separation of private stablecoins and bank-operated CBDCs.
„Since a stablecoin is backed by sovereign currencies of leading nations, that’s certainly an improvement over crypto assets, I would say,“ Powell continued.
„But still, where does the credibility come from? It comes from that sovereign currency that the asset is pegged to.“
Fiat currencies are „issued for the common good“. At the same time, he stressed that stablecoins would not form the basis of the global financial system in the future.