In a recent development, a Fed official has shared his take on Bitcoin, amidst growing discussions around the potential establishment of a strategic Bitcoin reserve in the US. In a recent X post, Austan Goolsbee, the president of the Federal Reserve Bank of Chicago, has shared that the Fed is legally limited about what it can actually put on its balance sheet.
Notably, Chair Jerome Powell previously mentioned that the Federal Reserve is legally barred from holding Bitcoin under the Federal Reserve Act and that the institution has no interest in changing the law. In 2021, he also stated that Bitcoin isn’t a reliable store of value because of its high volatility.
In a recent press conference, Powell said that banks could offer cryptocurrency custody services now that the SEC dropped the controversial SAB-121 guidance. The crypto community reacted positively to the statement, causing Bitcoin to rise.
Several States Working Towards BTC Reserve
Last month, Powell described Bitcoin as a digital version of gold, aligning with views from its strong supporters. As for a Bitcoin reserve, that idea now seems less likely, with the chances of it happening by the end of April dropping to just 16%. However, most expect the reserve to be established sometime later this year.
Besides, several states like Texas, Florida, and Ohio are working on creating local Bitcoin reserves, although it’s unclear about how many will succeed. Cynthia Lummis of Wyoming, who proposed last year that the U.S. Treasury buy Bitcoin, recently said that establishing the reserve will be her top priority as the head of a new Senate subcommittee on digital assets.
Concerns Over Bitcoin’s Security, Liquidity
There are critics as well to the idea as recently, ECB President Christine Lagarde stated that she is confident Bitcoin will not be included in the European Union’s reserves. She emphasized that central bank reserves must be secure, liquid, and free from suspicion of criminal activities like money laundering.
Her rejection of the idea came after the head of the Czech National Bank proposed investing up to 5% of its reserves in Bitcoin, sparking new debates about Bitcoin’s place in national reserves.
Time To Act Fast: Senator Lummis
In response to recent events, Wyoming Senator Cynthia Lummis, a supporter of a national Bitcoin reserve, emphasized the need for quick action to gain a competitive edge. “If you’re not first, you’re last,” Lummis said, urging the U.S. to establish a strategic Bitcoin reserve and secure its future. The Trump administration is exploring the benefits of such a reserve but has not yet made any official announcements.
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