Fed Chair Jerome Powell Says, 'We're Not Allowed to Own Bitcoin' Amid Trump’s Push for Bitcoin Strategic Reserve
12/19/2024 04:11
Powell said "we are not looking for a law change."
Federal Reserve Chair Jerome Powell has ruled out the possibility of the central bank adding Bitcoin to its balance sheet, citing legal restrictions under the Federal Reserve Act.
Powell addressed the issue during a Dec. 19 press conference, emphasizing that the Fed is not pursuing any legislative changes to alter this position.
"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," Powell said. "That’s the kind of thing for Congress to consider, but we are not looking for a law change at the Fed."
Bitcoin faced its first drop in four days following Powell’s comments and a more cautious tone from the Federal Reserve. BTC fell 5.9% to $100,605, retreating from its record-breaking high of $108,000 achieved on Dec. 18.
The global cryptocurrency market also dropped, with its market capitalization falling to $3.67 trillion — a 7.6% drop in the last 24 hours. Other major cryptocurrencies were also hit hard. Ethereum, XRP, and Solana recorded losses ranging from 4% to 11%, reflecting a broader market correction.
On Wednesday, the Federal Reserve cut interest rates by a quarter-point, bringing the target range to 4.25%–4.5%. Stocks reacted negatively too, with the S&P 500 and Nasdaq Composite each falling 0.4%, and the Dow Jones Industrial Average losing roughly 100 points, marking its 10th consecutive losing day.
Powell noted that the central bank’s rate policy is now “significantly less restrictive” after a full percentage point reduction since its peak. He said future cuts in 2025 would depend on incoming economic data, with a focus on inflation progress and labor market strength.
Despite the pullback, analysts at Santiment observed a potential silver lining.
"Considering BTC has stayed above $100K (for the time being) and not dipped as aggressively as its normal fluctuations compared to the S&P 500, this can actually be interpreted as a sign of strength once the dust settles over the next 24-48 hours," wrote analysts at Santiment, a blockchain analytics platform.
President-elect Donald Trump has reiterated his vision for a strategic Bitcoin reserve, a concept he first proposed during his campaign.
On Dec. 12, Trump said, “We’re gonna do something great with crypto because we don’t want China, or anybody else … but others are embracing it, and we want to be ahead.”
The U.S. government already holds 212,847 BTC, valued at $22.3 billion, from law enforcement seizures. However, it remains unclear whether Trump’s proposed reserve would incorporate these holdings or involve additional market purchases.
Trump has consistently championed Bitcoin as a strategic asset, promising to position the United States ahead of nations like China in the cryptocurrency race. Speculation is growing that an executive order could formalize Bitcoin’s status as a reserve asset shortly after Trump takes office on Jan. 20, 2025.