Fed Reserve Chairman Jerome Powell has given his views on cryptocurrencies while testifying before the House Financial Services Committee on July 17, 2018. Replying to Patrick Mchenry, Vice Chairman of the House Financial Services, he said that cryptocurrencies do not represent a threat to current financial system yet but may soon in the future. The Fed Chairman explicitly stated that the Federal Reserve is not exploring the idea of its own digital currency.
Jerome Powell criticized digital currencies for the lack of intrinsic value. He also stated that cryptocurrencies are probably being used for money laundering. “I think there are also significant investor risks,” said the Fed Chairman warning about the high volatility of cryptocurrencies. He added, “There is no promise behind it. It is not really a currency and it does not have any intrinsic value.”
Cryptocurrencies were subjected to heavy criticism by the Fed Reserve Chairman. For any currency to be widely accepted it must be means of payment and store of value. He said that cryptocurrencies are neither a mean of payment nor a store of value. The Fed Chairman said that people were selling their cryptocurrency holdings and then paying in dollars. Hence, it is not a mean of payment.
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