Fed Chair Powell Criticizes Cryptocurrencies
Jerome Powell, who became Fed chair in February, succeeding fellow cryptocurrency critic Janet Yellen, said on Capitol Hill 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.”
“There are investor and consumer protection issues as well,” continued Powell, whose comments were recorded by CNBC, adding that cryptocurrencies should not be considered real currencies since they have no intrinsic value.
However, though still largely a retail-driven industry, the cryptocurrency market has seen increasing attention from institutions and other sophisticated buyers.
Earlier this week, BlackRock — the world’s largest asset manager — confirmed that it has established a cryptocurrency working group, while other firms including Goldman Sachs, Nasdaq, and Intercontinental Exchange (ICE) have been actively exploring ways to profit from the burgeoning asset class as well.
Grayscale Investments, creator of the Bitcoin Investment Trust (OTC: GBTC), published a report on Wednesday indicating that it is adding nearly $10 million in new investments every week, primarily from institutions and other wealthy investors.
In any case, Wednesday was not the first time that Powell has discussed bitcoin. Last November, just as the market was knee-deep in a record-setting bull run, he said that cryptocurrencies as an asset class had not yet become large enough to have a destabilizing effect on the economy. He also praised blockchain technology, suggesting that it could “have significant applications in the wholesale payments part of the economy.”