On Tuesday, January 23, the United States Senate officially confirmed Jerome Powell as the next chairman of the Federal Reserve. Powell has spoken extensively about cryptocurrency and blockchain technology in the past, and has a seemingly positive outlook about the possibility of the introduction of distributed ledger technology (DLT) into the US’ existing financial systems. However, he has also expressed that the technology is too new to be relied upon.
Historically, Powell has expressed interest in blockchain technology, although he isn’t necessarily a fan of Bitcoin or any other cryptocurrencies. In a speech Powell delivered at the Yale Law School last year, he acknowledged BTC’s role in bringing distributed ledger technology further into the world of mainstream financial technology.
He continued by acknowledging that the advent of cryptocurrencies has led some to believe that: “DLT will, in the long run, render parts of the banking and payments system obsolete, as the intermediation of funds through the banking system will become unnecessary.”
However, Powell noted that because blockchain is such a new technology, there are many things about it that need to be developed. Powell expressed the need for “standardization and interoperability across different versions of DLT,” an important factor for adoption of DLT into real-world use.
In the Yale speech, Powell also voiced the need for legal structures that could properly regulate a DLT network that extended over multiple countries or other kinds of legal jurisdictions.
Powell in November: Crypto “Isn’t Big Enough” to be a Concern
In late November, Powell testified before the Senate Banking Committee as part of the process of his confirmation. During his testimony, Senator David Perdue of Georgia asked Powell about his views on cryptocurrency and blockchain technology.
Senator Perdue pointed out that Bitcoin’s market value had surpassed that of 29 of the S&P 500 Corporations in the US, and expressed concern that there was “another bubble that is some four or five times the size of the dotcom bubble.”
Powell responded: “In the long, long run, things – cryptocurrencies – of that nature could matter. They don’t really matter today. They’re just not big enough. There isn’t anywhere near close to enough volume for it to matter.”
Of course, his remarks came before a few important events: before the day that the crypto market cap surpassed half a trillion dollars in mid-December, and before Bitcoin’s rocket to nearly $20,000 in the wake of the induction of BTC futures trading at exchanges CME and CBOE (and subsequent fall).
However, he reaffirmed his interest in DLT: “We actually look at blockchain as something that may have significant applications in the wholesale payments part of the economy, something we pay close attention to.”