Jerome Powell, chairman of the U.S. Federal Reserve, had some harsh words for cryptocurrencies during an appearance before the U.S. Congress.
Speaking to the House Financial Services Committee, the head of U.S. central bank said Wednesday that cryptocurrencies have no “intrinsic value” and presented severe risks to investors, as CNBC reported. Part of his concerns seemingly stem from the apparent crypto bubble – he said that “relatively unsophisticated investors see the asset go up in price, and they think ‘this is great, I’ll buy this.’ In fact, there is no promise of that.”
He added:
“It’s not really a currency. We’re not looking at this as something that we should be doing … Mainly I have concerns. If you think about what currencies do, they’re supposed to be a means of payment and a store of value basically and cryptocurrencies are not used very much in payment … and in terms of the store of value, if you look at the volatility it’s just not there.”
“They are very challenging because cryptocurrencies are great if you’re trying to hide or launder money, we have to be very conscious of that,” he said.
That being said, though “there are investor and consumer protection issues,” Powell said the cryptocurrency market isn’t big enough to threaten financial stability, and therefore the Fed isn’t seeking to regulate it, according to Bloomberg.
Powell’s testimony comes hours before the Financial Services Committee is set to host another hearing directly focused on cryptocurrencies. As previously reported by CoinDesk, the committee hearing will hone in on the question of whether cryptocurrencies are a new form of money.
A memo published after the hearing was announced notably states that members will examine “the extent to which the U.S. government should consider cryptocurrencies as money and the potential domestic and global uses for cryptocurrencies.”
Powell image via Wikimedia Commons