Powell says Fed is not looking for Bitcoin law change

Federal Reserve chairman says possible Bitcoin reserve is something for Congress to consider, not US central bank

Federal Reserve chairman Jerome Powell. AFP

Federal Reserve chairman Jerome Powell on Wednesday said that the central bank has little appetite for holding a Bitcoin stockpile.

“We are not allowed to own bitcoin,” Mr Powell told reporters after the Fed lowered interest rates by 25 basis points to its current target range of between 4.25 and 4.50 per cent.

He was addressing a reporter who asked him if he saw any value in the US government building a Bitcoin reserve akin to the US oil reserve.

“The Federal Reserve says what we can own and we’re not looking for a law change. That’s the kind of thing for Congress to consider but we are not looking for a law change at the Fed,” Mr Powell said.

The price of Bitcoin fell after his remarks. At 6pm ET, the price of Bitcoin was $101,127.35, down 5.17 per cent.

The remarks come after president-elect Donald Trump voiced support for the idea of establishing a strategic Bitcoin reserve. Mr Trump has also promoted the idea of making the US the “crypto capital” of the world.

Speaking at the Bitcoin Mena conference in Abu Dhabi last week, Eric Trump said his father would protect the cryptocurrency from regulation that could stifle its growth. Bitcoin has surged since the elder Mr Trump's November 5 victory, by 48 per cent, with supporters enthusiastic about its future under his second administration.

The Fed on Wednesday indicated it would issue fewer rate cuts next year due to stubborn inflation. Projections released by the central bank showed officials anticipate the Fed will cut rates twice next year to 3.90 per cent, 50 basis points higher than its September projections.

Mr Powell said the Fed can “be more cautious” in making future policy decisions. He also noted the higher rate outlook reflected firmer inflation forecasts. The Fed expects inflation to end 2025 at 2.5 per cent, 0.4 per cent higher than it forecast in September.

Major US indexes sank after the outlook. The Dow Jones Industrial Average fell 1,123.03 points – or 2.58 per cent – to 42,326.87. It marked its 10th straight losing day, its worst streak since 1974.

The S&P 500 and Nasdaq Composite fell 2.95 per cent and 3.56 per cent, respectively.