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This Wednesday the last meeting of the Federal Open Market Committee (FOMC) of 2024 concluded. At it, a new interest rate cut of 0.25% was agreed, as expected. During the customary subsequent press conference, Fed Chairman Jerome Powell stated that the law does not allow the central bank to own Bitcoin.
When asked by one of the reporters about the incorporation of BTC into the US strategic reserves, the official was reluctant. The latter makes it clear that 2025 could be marked by a power struggle in the politics of the North American country. For years, the differences between Jerome Powell and Donald Trump have been evident.
During his campaign, the Republican magnate promised to add Bitcoin to US reserves. Recently, during an interview on CNBC, he confirmed his interest in adopting this measure. So far, it is unclear whether the government’s purchase of BTC will be done through an act of Congress or through an executive order.
The truth of the matter is that Powell’s statements suggest that there will be tensions on this issue. «We are not allowed to own bitcoins. The Federal Reserve Law says what we can own and we are not looking for a change in the law,” Powell said with obvious gestures of discomfort.
Can Trump force the Fed to adopt Bitcoin?
It is important to note that the laws restricting the Fed from owning Bitcoin are not entirely set in stone. Simply put, Congress or an executive order could force the central bank to adopt this or other assets. In both cases, both the Fed and the Treasury Department should abide by those higher mandates.
However, the heads of these agencies could put up obstacles, as Powell himself implies when he says that “they are not looking for a change in the law.” However, the official conceded that in the end everything is in the hands of Congress: “Those are the kinds of things that Congress should consider. But we are not looking for a change in the law at the Federal Reserve.
Recently, the Treasury Department released a report on Bitcoin, which it compared to gold in digital form. This means that the Treasury seems less willing to confront the policies of the incoming Republican administration.
In any case, an executive order or a law of Congress not followed would generate a situation of political instability caused by the Fed. Consequently, Powell’s hostility could mean that his continuity at the head of the Federal Reserve is compromised.
Powell’s statements about the Fed’s reluctance generated a negative reaction in the price of Bitcoin. At the time of closing this note, the currency loses 3% in one hour and threatens to drop below $100K.
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