U.S. Federal Reserve and Bitcoin

U.S. Federal Reserve Chair Jerome Powell stated that the central bank cannot hold bitcoin and is not pursuing changes to current laws regarding this issue.

During a news conference on Wednesday, an Axios journalist questioned Powell about the U.S. government building a bitcoin reserve.

> "We're not allowed to own bitcoin," Powell replied. "The Federal Reserve Act specifies our permissible assets, and we're not seeking to change that law. It’s a matter for Congress to consider, but no law change is being sought at the Fed."

In Congress, Senator Cynthia Lummis from Wyoming has proposed a bill aimed at instructing the U.S. Treasury to purchase one million bitcoins over five years.

Ahead of the November elections, President-elect Donald Trump expressed support for establishing a strategic bitcoin reserve. In a CNBC interview last week, Trump emphasized, "we're gonna do something great with crypto, as we don't want China or anyone else to lead in this space."

Other states are also contemplating bitcoin investments; for instance, Republican lawmakers in Pennsylvania introduced a bill last November permitting its state treasurer to invest in bitcoin and crypto-based exchange-traded products.

However, the strategic bitcoin reserve proposal has faced criticism. Former Federal Reserve Bank of New York President Bill Dudley recently cautioned in a Bloomberg opinion piece that it would not benefit Americans.

Following Powell's news conference, the Federal Reserve announced a 25 basis point interest rate cut, causing bitcoin's value to drop nearly 5% to around $100,500, according to The Block's price page.

Zach Pandl, head of research at Grayscale, noted, "Bitcoin's price dip after Powell's comments suggests investors might be overly focused on the potential for a strategic Bitcoin reserve. While Grayscale Research anticipates more countries adopting Bitcoin, the next movement is likely to involve sovereign wealth funds in Asia or the Middle East, which already manage diverse assets."