Cryptocurrencies have failed woefully as a payment system, Fed Chair Powell declares

Cryptocurrencies have failed woefully as a payment system, Fed Chair Powell declares

During an appearance before the Senate Banking Committee on Thursday, Federal Reserve Chairman Jerome Powell expressed his disapproval over the use of cryptocurrencies such as Bitcoin for payments. According to him, the asset class has “completely failed” as a means of payment.

The Fed Chair touched on the use of cryptocurrencies for payments, potential regulatory framework, and the place of a central bank digital currency (CBDC) in the United States.

On digital currencies, Powell asserted that they were not appropriate for payments. He said:

With cryptocurrencies, it’s not that they didn’t aspire to be a payment mechanism, it’s that they completely failed to become one (except for people who desire anonymity, of course, for whatever reason).

He also confirmed that he is still undecided on the pros and cons of a central bank digital currency (CBDC), explaining that:

I am legitimately undecided on whether the benefits (of a CBDC) outweigh the costs or vice versa... we would want very broad support in society and in Congress and ideally that would take the form of authorizing legislation as opposed to a very careful reading of ambiguous law

Speaking further, Powell claimed that inflation and insubstantial market conditions were accountable for Bitcoin’s recent instability. He added that appropriate regulations ought to be put on the ground following the rapid rise of stablecoins.

The Chairman’s comments will raise opposing opinions from proponents of cryptocurrencies, considering the fact that many traditional companies are now jumping on the crypto train.

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