The U.S. Federal Reserve will be keeping a watchful eye on bitcoin and other cryptocurrencies, Fed chair nominee Jerome Powell said before Congress on Tuesday.
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While acknowledging that cryptocurrencies don’t matter much for the Fed and its policymaking decisions right now because there isn’t enough volume, the U.S. central bank is monitoring developments and long-term trends, Powell said.
Specifically, over the “long, long run,” Powell said blockchain, which is the underlying technology for digital currencies like bitcoin, could “have significant application in wholesale payments.”
Powell refused to comment on whether he thought cryptocurrencies were overvalued or approaching bubble territory, as bitcoin surged 4.5% to a new record high on Monday, trading just a few percentage points shy of $10,000. The value of bitcoin has increased more than 700% this year alone.
Major business leaders remain mixed on the significance of cryptocurrencies. While JPMorgan’s (JPM) Jamie Dimon said bitcoin “wasn’t going to work” at an investor conference in September, billionaire investor Peter Thiel told FOX Business last month that the currency was “very underestimated. Meanwhile, Overstock (OSTK) CEO Patrick Byrne is launching the first fully regulated cryptocurrency exchange.