Bitcoin hits its highest level since mid May and has risen more than 15% over the past week.
Even while pressure mounts to taper its asset purchases, the central bank will continue its accommodative quantitative easing.
Policymakers should not be concerned, the researchers wrote: Only 0.02% of coronavirus-relief checks ended up in bitcoin.
The Federal Reserve chair said "the more direct route" would be to regulate stablecoins.
The report will address cryptocurrencies, stablecoins and CBDCs.
Financial markets from stocks to bonds to cryptocurrencies have been fixated on inflation readings as the economy reheats.
The central bank's monetary policy report to congress gave crypto a rare shoutout Friday.
The Labor Department also revised May's numbers up by 24,000.
A Federal Reserve official praised stablecoins over CBDCs, yesterday. The debate cuts right to role of government in money.
Randal Quarles expressed more support for stablecoins than some of his colleagues.
Bitcoin remains relatively resilient, having priced in the Fed's hawkish tilt in advance.
Bitcoin is under pressure as Fed taper concerns linger, although some expect crypto to remain resilient.
The U.S. central bank also increased estimates of coming inflation to 3% from the 2.2% projection in March, largely due to transitory factors.
This was a significant increase from the 2.4% officials were predicting in March.