Jerome Powell, chairman of the U.S. Federal Reserve, raised concerns about cryptocurrencies on Wednesday, saying they present serious risks to investors.
During his testimony before the House Committee on Financial Services,Powell was asked for his opinion on cryptocurrencies and he had few kind words for the sector.He told members of Congress that “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.”
Powell today reiterated that the US central bank doesn’t regulate this asset class and has no plans bring cryptocurrencies under its jurisdiction. And contrary to rumors, the central bank will not develop cryptocurrency of its own. He said:
“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.”
However, Powell wasn’t all negative in his hearing. He said that we live in a time of extraordinary technological change. He added that the regulators should be open to the new ideas and innovations that will drive economic growth and improvements in the financial system.
In his final comment about the sector, Powell said that the Federal Reserve is not looking at creating a creating a digital currency.
Jerome H. Powell took office as Chairman of the Board of Governors of the Federal Reserve System on February 5, 2018, for a four-year term. Mr. Powell also serves as Chairman of the Federal Open Market Committee, the System's principal monetary policy making body. Mr. Powell has served as a member of the Board of Governors since taking office on May 25, 2012, to fill an unexpired term. He was re-appointed to the Board and sworn in on June 16, 2014, for a term ending January 31, 2028.
He previously commented on crypto last November, when he said that a drop in cryptocurrency assets would not destabilize an economy. He added, however, that “in the long, long run, cryptocurrencies and things of that nature could matter,” adding that blockchain — bitcoin's underlying technology — could be something that “may have significant applications in the wholesale payments part of the economy.”