The Fed says that Bitcoin, as a financial product, must comply with current regulations.
Bitcoin is stable at $20,000 per unit.
The President of the United States Federal Reserve, Jerome Powell, indicated to Congress that more regulation is needed on operations with bitcoin and other cryptocurrencies. Although the price of Bitcoin turned moderately lower after the announcement, it has since recovered and is holding around $20,300 this Thursday.
Powell appeared before the Committee on Banking, Housing, and Urban Affairs to present its monetary policy report. This report is submitted for examination by the Banking Committee twice a year. In this way, we have made some progress in terms of what the US economy holds for the rest of the year.
In his previous statement, Powell acknowledged that inflation is well above the Fed’s 2% target for this year. With inflation in the past 12 months in May at 8.6%, as reported in this medium, Powell referred to the rate increases as follows: The main measure to reduce the increase in the prices of products and services.
More regulation of cryptocurrency
Arizona Senator Kristen Sinema pointed out at the event that cryptocurrencies have been experiencing “big volatility” in recent weeks. Given this fact, Powell asked if the Fed is following this situation and what its implications are for the broader economic outlook.
We’re tracking those events very carefully, of course, and we don’t see any significant macroeconomic impacts yet. But I think the main implication is that in this very innovative new space, a better regulatory framework is really needed. Many digital financial products are somewhat similar to those found in the banking system or capital markets, but they are not regulated in the same way.
Jerome Powell, Chairman of the US Federal Reserve.
The fact that Powell raised the need for further regulation of Bitcoin (BTC) and other cryptocurrencies, did not have an obvious impact on the price. Apparently, the ratification of the upcoming increases, which was already done when the Federal Reserve announced a 75 basis point increase, as reported by CriptoNoticias, had a calming effect on investors.
At the time of writing this article, the price of Bitcoin is at $20,567, as indicated by the CriptoNoticias Price Index, a level similar to the level it was at last Monday 20. Bitcoin is showing a decrease compared to the beginning of the year 55.4% and 35% decline so far in June. This last number is the largest monthly decline in 2022.
Powell rules out a recession scenario
Regarding the outlook for the economy in the following months, many senators reflected concern that inflation-control measures, which curb spending and consumption, could cause a recession.
“We’re not trying to cause a recession, and I don’t think we need to do a recession,” Powell said. “But we think it’s absolutely essential that we restore price stability, really for the benefit of the labor market like anything else.”
An increasing number of organizations see a high probability of a recession in the next 12 months, CriptoNoticias reported. However, Powell argues that forecasting a recession is very difficult, Although he noted that he does not consider the risks to be particularly high.
“The US economy is strong right now. Spending is strong. Consumers are doing well. Business is doing well. Monetary policy is notorious for being a blunt tool. There is a risk that weaker outcomes are certainly possible. But that is not our intention,” the official said.