For a long time, we had not seen statements from Powell or other members focusing on cryptocurrencies. And finally, they have arrived. Despite the approval of a spot Bitcoin ETF, they are not fully embracing it, but they certainly see it as more legitimate than before. The statements include details on various topics, including DeFi. So, what did the Fed member say?
Fed and Cryptocurrency Statements
Fed member Waller mentioned in his recent statements, at the time this article was prepared, that they do not want banks to hold large amounts of crypto ETPs. This is not something that happens often anyway. Moreover, the ETFs approved by the SEC target individual investors. Banks only work with issuers on matters such as storing cash in these ETFs.
On the other hand, he mentioned the following on some topics, including DeFi;
“Changing payment conditions – for example, the rapid growth of digital currencies – could reduce confidence in the US dollar. People often assume that cryptocurrencies like Bitcoin could replace the US dollar as the world’s reserve currency. However, most transactions in the decentralized finance (DeFi) sector use stablecoins, which peg their value one-to-one to the US dollar. Approximately 99% of the stablecoin market value is tied to the US dollar, which means that crypto assets are effectively traded in US dollars. Therefore, the expansion of trading transactions in the DeFi world will likely strengthen the dominant role of the dollar.”
Lastly, in his statement today, he also emphasized that there is no current need for a Central Bank Digital Currency (CBDC).
