Federal Reserve Chair Jerome Powell now demonstrates different views about Bitcoin which has attracted comments from Binance founder Changpeng Zhao (CZ). During a recent statement, Powell compared Bitcoin and Gold indicating his evolving attitude about cryptocurrency since demonstrating his hesitance. When CZ heard Powell’s statement he labeled it an enhanced version of the prior information. The digital assets industry now generates interest regarding how regulators view this emerging field.
Powell’s Changing View on Bitcoin
At the New York Times DealBook Summit Powell expressed that Bitcoin works as a volatile speculative commodity. Virtual currency functions in the same way as traditional gold materials do. At the New York Times DealBook Summit, the Fed Chair changed his position regarding Bitcoin by pursuing the first acknowledgment that the cryptocurrency has value for speculative trading beyond its exchangeability.
The Federal Reserve chairman distinguished Bitcoin from the U.S. dollar even though he acknowledged it as a virtual asset. Bitcoin remains an unstable currency because of its price volatility and poor performance as a payment method. Institutional acceptance of Bitcoin continues to expand through its comparison with gold.
CZ Responds to Powell’s Statements
After Powell made his statements Binance creator CZ announced his thoughts through social media channels. The evolution of the Fed Chair’s mindset toward Bitcoin represents an “improvement” according to him given the expanding acceptance of Bitcoin as a store of value. The crypto community showed approval after this news because it indicated Bitcoin was heading toward becoming formally accepted in mainstream financial circles.
Powell stated that the Federal Reserve cannot keep Bitcoin in its reserves due to legal restrictions. Federal Reserve policy restricts the entity from holding Bitcoin within its assets. Under the guidelines of the Federal Reserve Act, the Fed determines what it can possess but no change to the legislation is currently sought by Powell. The Federal Reserve maintains its conservative position regarding digital assets in financial markets while recognizing how these assets continue to grow in international money systems.
Regulatory Challenges and the U.S. Crypto Landscape
Federal Reserve Chair Jerome H. Powell spoke about cryptocurrency regulation during an era when financial authorities in America focused on this matter. The Federal Reserve System continues to adopt a demanding stance regarding digital assets because it focuses on defending both financial stability and consumer protection requirements. The Federal Reserve has not extended its legal backing to Bitcoin and other cryptocurrencies because they do not align with their formal guidelines.
Lawmakers are intensifying their drive to bring Bitcoin into the U.S. financial infrastructure. Senator Cynthia Lummis and other pro-crypto lawmakers have developed bills that aim to add Bitcoin to the national reserves for consideration by the government. Fierce opposition blocks these proposals because market instability and illegal transactions become major issues of contention. The Biden administration prevents digital assets expansion through regulatory oversight while avoiding supportive actions.
Bitcoin’s Market Reaction and Future Outlook
Bitcoin prices rapidly increased after Federal Reserve Board Chairman Jerome Powell released his statements to the public. Participant markets interpreted Powell’s words as they represented a first step to institutional approval. The market exists under the ongoing impact of inflationary fears and Federal Reserve policy decisions.
New data released by the U.S. Consumer Price Index (CPI) together with the Producer Price Index (PPI) indicates increased inflation rates in the economy which created market unpredictability. This cautious position revealed by the Federal Reserve hinders Bitcoin’s capability to operate as an established financial instrument despite its reputation as an inflation-hedge asset.
The global growth of Bitcoin adoption moves forward despite facing regulatory obstacles. The entry of Bitcoin exchange-traded funds (ETFs) as well as institutional investments demonstrate increasing trust in digital assets. Several institutions and regulators will guide Bitcoin’s financial market development through ongoing debate and they will establish its future direction.
Financial institutions including the Federal Reserve will decide through their evolving positions how Bitcoin will be viewed throughout future years. The recent statements by Powell might preview a developing regulatory framework and an advanced understanding of digital assets for the U.S. financial system.
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