Bitcoin’s popularity has nothing to do with central bank policy

Federal Reserve Chairman珍妮特•耶伦recently expressed her views on Bitcoin regulation. She believes that national financial regulators should be cautious in regulating Bitcoin and should not "stifle innovation."

Yellen's comments came in response to an inquiry submitted to her by米克•马尔瓦尼, vice chairman of the House committee that discusses financial services, monetary policy and trade issues, at a July 15 meeting.

In the 11-page report, Mulvaney wonders how authorities view the rise in popularity of bitcoin during this summer's Greek crisis and directly addresses whether the growing popularity of bitcoin technology means the public may have lost confidence in the Fed's ability to conduct monetary policy.

Yellen responded:

“We do not believe that the popularity of Bitcoin is related to the public’s view of the Federal Reserve’s monetary policy.”

In addition to responding to the above two questions, Yellen emphasized the issue of Bitcoin regulation in the United States, pointing out that the Federal Reserve and federal banking agencies have "limited power" over the operation of the digital currency system.

“The Federal Reserve Bank seeks to ensure that banking organizations that provide services to a business or individual that is an administrator or trading platform for a digital currency are in full compliance with all applicable regulatory requirements.”

She also noted that the powers of other federal and state regulators to regulate bitcoin may vary depending on their specific missions.

Yellen's response is consistent with her past public statements on Bitcoin and blockchain technology.

Yellen first expressed her views on Bitcoin technology at a Senate Banking Committee meeting in February last year, when she said the U.S. central bank does not have the power to oversee or regulate digital currency systems such as Bitcoin.

Costs and benefits

Yellen suggested that U.S. authorities carefully weigh the "costs and benefits" of regulations. For example, how regulatory regulations can "enhance the soundness of digital currency plans and increase public trust in digital currencies." Yellen also suggested that authorities consider whether the technology is more different or more risky than other new payment systems.

Yellen also reminded that Bitcoin technology has an "evolving nature," so regulations cannot stifle innovation. A balance must be sought.

She said:

“Some people may not invest in or use digital currencies due to uncertainty surrounding digital currency regulation and the lack of consumer protection policies in the space.”

The New York State government's specific regulatory system for digital currency, Bitlicense, has been criticized by many in the digital currency industry because it is not only vague but also imposes excessive compliance costs on start-ups. Other states are also trying to introduce Bitcoin regulation, such as California's regulatory provisions, but the public has mixed reviews on this.