In his semiannual appearance Wednesday before the U.S. House Financial Services Committee, Fed Chair Jerome Powell said that cryptocurrencies “are great if you are trying to hide money or if you are trying to launder money,” but they have no “intrinsic value.”
Nor are they a particular problem for the Fed yet because they are inconsequential in value compared with the money supply. The money supply (M1), comprised of all circulating cash and checking account deposits, totaled around $3.658 trillion in June.
The value of 1,649 cryptocurrencies is less than $300 billion, according to CoinMarketCap. Daily trading volume for bitcoin, the most liquid of the cryptocurrencies, reached about $5.8 billion on Wednesday, while average daily foreign exchange volumes hit an average of $1.84 trillion in London alone in the first half of this year. Globally the total daily dollar volume of the forex market is something like $5 trillion.
What Powell worries about is not the size of the market, but the risks to small investors:
I think there are significant investor risks. Investors, relatively unsophisticated investors, see the asset going up in price and they think “this is great I’ll buy this.”’ In fact, there is no promise behind that…. So I think there are investor and consumer protection issues as well.
Powell does not see cryptocurrencies as real fiat money:
It’s not really a currency, it doesn’t really have any intrinsic value… Mainly I have concerns. If you think about what currencies do, they’re supposed to be a means of payment and a store of value basically and cryptocurrencies are not used very much in payment… and in terms of the store of value, if you look at the volatility (or lack thereof), it’s just not there.
None of what Powell said is likely to deter interest and investment in cryptocurrencies. But it is instructive to note that the Fed is keeping an eye on them, even though Powell does not believe that they fall under any Fed regulatory control, nor, he says, is the Fed interested in providing any oversight of cryptocurrencies.
Credit Card Companies Are Doing Something Nuts
Credit card companies are at war. The biggest issuers are handing out free rewards and benefits to win the best customers.
It’s possible to find cards paying unlimited 1.5%, 2%, and even more today. That’s free money for qualified borrowers, and the type of thing that would be crazy to pass up. Those rewards can add up to thousands of dollars every year in free money, and include other benefits as well.
We’ve assembled some of the best credit cards for users today. Don’t miss these offers because they won’t be this good forever.
Flywheel Publishing has partnered with CardRatings for our coverage of credit card products. Flywheel Publishing and CardRatings may receive a commission from card issuers.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.