Powell’s Comments Underscore Broader Fed Skepticism Toward Government-Managed Bitcoin Reserves

Powell's comments, made during a press conference following the Federal Open Market Committee (FOMC) meeting, also underscored broader skepticism

Federal Reserve Chair Jerome Powell has ruled out the possibility of the central bank holding Bitcoin in its reserves, despite ongoing discussions about a potential U.S. strategic cryptocurrency reserve.

Speaking to reporters following the Federal Open Market Committee (FOMC) meeting on Wednesday, Powell stated that the Federal Reserve Act outlines what the central bank is permitted to own, and Bitcoin is not included in that list.

"We're not pursuing a law change at the Fed — that's a matter for Congress," Powell added.

The remarks come in response to speculation about a potential U.S. strategic Bitcoin reserve, following suggestions made by President-elect Donald Trump during his campaign.

Trump has proposed creating a government-controlled Bitcoin reserve, which would be seeded with assets seized in criminal activity. According to CoinGecko, the U.S. currently holds nearly 200,000 Bitcoins, valued at over $20 billion.

However, Powell expressed skepticism about the practicality of such a measure, reflecting the Fed's broader wariness towards digital assets.

"I don't think that would work," Powell said.

Bitcoin's price, which had been rising in recent weeks amid anticipation of a more crypto-friendly stance from Trump, took a hit following Powell's remarks.

During the trading session, the cryptocurrency's value dropped by over 5%, falling below $98,000. Other notable losers included Dogecoin, Ethereum, and Binance Coin, highlighting the market's volatility.

The price of Bitcoin had risen significantly in the lead-up to Trump's victory, largely due to his campaign's suggestions of a more favorable regulatory environment for cryptocurrencies.

However, as the dust settles and the reality of Trump's presidency becomes clearer, it remains to be seen whether his administration will actively pursue the establishment of a strategic Bitcoin reserve.