Federal Reserve Chairman Jerome PowellJerome PowellOn The Money — Support for new COVID-19 relief grows Stocks rally to close with gains after Dow lost 1000 points Stocks plunge as Wall Street flooded with uncertainty MORE on Monday warned of the risks associated with cryptocurrencies such as Bitcoin, in part because of their high volatility.
“They're highly volatile, see Bitcoin, and therefore not really useful as a store of value and they're not backed by anything,” Powell said during a digital panel discussion hosted by the Bank of International Settlements.
He added that crypto assets are more used for “speculation,” rather than a “means of payment.”
“They're more of an asset for speculation, so they're also not particularly in use as a means of payment. It's more a speculative asset that's essentially a substitute for gold, rather than for the dollar,” he said.
Powell also addressed the potential for the Federal Reserve to institute its own central bank digital coin. He said the Fed is “exploring” the issue, but that it is “not in a mode of trying to make a decision at this point.”
He added that they are experimenting with technology and discussing policy.
Bitcoin prices have surged in the past year as large companies and many banks begin adopting cryptocurrencies, Markets Insider reported.
In February, Tesla purchased $1.5 billion worth of bitcoins and announced plans to accept the cryptocurrency as payment in the future.
According to Markets Insider, the price of bitcoins increased to more than $61,000 each earlier this month, as more investors try to profit off the cryptocurrency's growing popularity.