Powell calls cryptocurrencies ‘vehicles for speculation’

Federal Reserve Chairman Jerome Powell holds a press conference following the two-day meeting of the Federal Reserve’s Federal Open Market Committee on July 31, 2019 in Washington.

Sarah Silbiger | Reuters

Cryptocurrencies are primarily used to place bets on price hikes and have not yet reached the status of payment mechanisms, Federal Reserve chairman Jerome Powell said on Wednesday.

“They are really a means of speculation,” said the central bank chief of the Economic Club of New York in a virtual interview with David Rubenstein, co-founder of the Carlyle Group. “They are not really actively used as a means of payment.”

Powell compared crypto to gold.

“For thousands of years people have given gold a special value that it doesn’t have,” he said as an industrial metal.

The comments came on the same day that Coinbase went public in a direct listing on Nasdaq, an exchange weighted with technology companies.

Coinbase is the predominant exchange for trading Bitcoin and other cryptocurrencies. It opened at $ 381 per share, well above the reference price of $ 250. The company announced it had $ 1.8 billion in revenue in the first quarter as prices for Bitcoin, Ethereum, and other crypto names rose sharply.

Powell’s predecessor at the Fed, Janet Yellen, is now Treasury Secretary. In February, it told CNBC that it viewed Bitcoin as a “highly speculative asset” and said it was not “widely used as a transmission mechanism” and an “extremely inefficient way of conducting transactions”.

In addition to a brief conversation about crypto, the Powell interview covered a wide variety of topics, much of which was a familiar reason to the Fed leader.

One revelation was that Powell has not yet met with President Joe Biden.

Fed observers have speculated whether Biden will give Powell another term as chairman when the current one expires in 2022. In a CBS 60-minute interview aired on Sunday, asked if he would like another term, Powell declined, saying his focus was on, “I’m doing the best job I can.”

Powell, who was named Fed chairman and heavily criticized by then-President Donald Trump, said he had not had any contact with Biden since he became president nearly three months ago.

When asked if he ever met Biden, Powell said, “I think I shook his hand, but I didn’t actually meet him and speak to him.”

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