Federal Reserve Chairman Jerome Powell warned on Monday of the risks associated with cryptocurrencies like Bitcoin, in part because of its high volatility.
“They are highly volatile, see Bitcoin, and therefore are not really useful as a store of value and are not supported by anything,” said Powell during a digital discussion panel organized by the Bank for International Settlements.
He added that cryptographic assets are more used for “speculation” rather than a “means of payment”.
“They are yet another resource for speculation, so they are also not particularly in use as a means of payment. It is more of a speculative asset that is essentially a substitute for gold than for the dollar, ”he said.
Powell also addressed the Federal Reserve’s potential to institute its own digital currency for the central bank. He said that the Fed is “exploring” the issue, but that “it is not in a way of trying to make a decision right now”.
He added that they are experimenting with technology and discussing policies.
Bitcoin prices rose last year as large companies and many banks began to adopt cryptocurrencies, Markets Insider reported.
In February, Tesla bought $ 1.5 billion in bitcoins and announced plans to accept the cryptocurrency as payment in the future.
According to Markets Insider, the price of bitcoins rose to more than $ 61,000 each earlier this month, as more investors try to cash in on the growing popularity of the cryptocurrency.