Federal Reserve Chair: US Central Bank Can't Regulate Bitcoin
Published on February 27, 2014 at 18:16 GMT
After months of silence on the matter, Federal Reserve chairwoman Janet Yellen has stated that the US central bank does not have the authority to regulate bitcoin.
Yellen was appointed as chair of the Federal Reserve last October after she was nominated to replace Ben Bernanke.
During an address to the Senate Banking Committee on 27th February, the top US banking official, said:
"The Fed doesn't have authority to supervise or regulate bitcoin in any way."
In her response, Yellen commented broadly on a score of issues including the impact of recent weather on US economic output, ongoing turmoil in the Ukraine and the new technologies that are more broadly impacting payments.
It was on the latter subject that the topic of bitcoin was introduced, with Yellen noting that such developments are "taking place outside the banking industry".
Notably, the remarks came in response to a question about bitcoin regulation by US Senator Joe Manchin, a noted critic of bitcoin.
The news follows Manchin's 26th February letter to the Federal Reserve chairwoman, which called for her to take aggressive action against bitcoin due to its involvement in criminal activity. The Bitcoin Foundation has also since responded to the letter.
Yellen continued, saying that FinCEN has indicated that current money laundering statutes are "adequate to meet enforcement needs".
Manchin later asked whether Yellen believed the US to be "behind the curve" in regards to regulation, a nod to his previously stated belief that the US should follow the lead of countries like China and Thailand in banning bitcoin.
“Certainly it would be appropriate for Congress to ask questions about what the right legal structure would be for digital currencies […] My understanding is Bitcoin doesn’t touch [US] banks.”
She ended her response by stating that the Federal Reserve is looking into the matter.
The statement notably comes at a time when many US state regulators are looking for guidance on how to put controls or safeguards on the bitcoin industry.
Though the most notable example would be New York, which held detailed hearings on the matter in January, Alabama and Texas have joined the conversation following the ongoing troubles at major Japan-based bitcoin exchange Mt. Gox.
Image credit: Flickr
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