The new chairman of the Federal Reserve in the United States has declared his stance on the world of cryptocurrencies and made it clear to the US House of Representatives where he stands. He is of the opinion that cryptocurrencies have no intrinsic value in and of themselves. They are not really used all that often as a means of transaction and they do not represent a great store of value. He feels that all they are good for is laundering money. The new chairman also shrugged off the idea completely that cryptocurrencies could actually pose a threat to the country’s financial stability because of where it stands right now.
Jerome Powell’s Testimony
Jerome Powell, who took office for the position of the chairman of the US Federal Reserve back in February of 2018 was asked some questions about cryptocurrencies in his testimony before the House Financial Services Committee on the 18th of July.
This committee oversees the issues related to the economy of the United States, the housing, insurance, banking system, monetary policies, exchanges, securities, international finance, international monetary organizations and all the efforts being made to fight terrorism all over the world.
Among the committee is the US Representative and the vice chairman of the committee, Patrick T. Mchenry. Mchenry asked Powell to give his views about the advent of cryptocurrencies to the US House Financial Services Committee. The response of the chairman saw him declare that there are no significant risks being posed to the unsophisticated investors that see the price of cryptocurrencies going up and assume that it is good for them. He says that it looks promising only on the surface and it holds no true value of its own. He elaborated on this by saying:
“Cryptocurrencies are great if you’re trying to hide money or if you’re trying to launder money…it doesn’t really have any intrinsic value so I think there’re investor or consumer protection issues as well.”
As far as whether or not cryptocurrencies are even currencies in his books, he claimed that cryptocurrencies cannot possibly be currencies.
“If you think about what currencies do, they’re supposed to be a means of payment and a store of value, basically. And cryptocurrencies…they’re not really used very much in payment. Typically people sell their cryptocurrencies and then pay in dollars. In terms of a store of value, you know, look at the volatility and…it’s just not there.”
That and the fact that the most recent BIS report among other things highlight the risks associated with cryptocurrencies and he feels that the responsible authorities for the regulation of cryptocurrencies should take the due action.