Bitcoin (BTC) Price Tests $100K After Fed Chair Powell Says the Central Bank Is Not Allowed to Hold BTC

The price of Bitcoin is testing $100,000 after Fed Chair Jerome Powell issued a statement on the central bank's ability to hold BTC.

Federal Reserve Chair Jerome Powell has stated that the central bank is barred from holding Bitcoin (BTC) due to existing laws.

Powell was fielding questions from reporters following the announcement that the Fed has cut its key interest rate by a quarter percentage point for the third time in a row.

When asked whether he sees any value in the Fed building a Bitcoin reserve, Powell stated that current laws make it impossible.

“We’re not allowed to own Bitcoin. The Federal Reserve Act says what we can own and we’re not looking for a law change.”

The Federal Reserve Act outlines the types of assets the central bank can hold, primarily including US government securities, mortgage-backed securities, and other assets related to its monetary policy operations.

Powell stated that only a congressional act can allow the Fed to buy BTC — something he has no interest in.

“That’s the kind of thing for Congress to consider, but we are not looking for a law change at the Fed.”

Powell's statement caused BTC to drop from around $103,700 to as low as $100,241 in less than an hour.

President-elect Trump has stated that he will ensure the US stops selling its trove of seized Bitcoin on the open market and instead strategically hold the asset as an investment.

Earlier this week, when asked by CNBC whether he plans to build a strategic BTC reserve, Trump said “Yeah, I think so.” However, to date, Trump has not issued a statement on the Fed directly buying BTC.

Wyoming Republican Senator Cynthia Lummis has introduced legislation that would direct the Fed to buy one million BTC over a five year period.

It remains to be seen whether her legislation will secure widespread backing within Congress.