FOMC Minutes Formally Mentions Cryptocurrencies
Shain Vernier • 2 min read
For the second time in the past 24 hours, the U.S. Federal Reserve has formally addressed cryptocurrencies. Following Fed member Neel Kashkari’s scathing condemnation, the FOMC Minutes disclosed its own comments on crypto. And, although they pale in comparison to Kashkari’s views, it’s clear that the Fed is directing its attention toward cryptocurrencies.
All in all, it’s a muted day for cryptos. Bitcoin BTC (-0.73%), Ethereum ETH (-2.57%), Ripple XRP (-3.11%), and Litecoin LTC (-2.70%) are all modestly in the red. The damage is a bit worse for Dogecoin, which is off more than 5%. Given the recent FED-dominated news cycle, these modest losses aren’t too bad.
Traditionally, the FOMC Minutes sticks to the basic nuts-and-bolts of Fed policy. Yesterday’s release had a bit of flavor regarding cryptocurrencies. Here are the key quotes:
- On the U.S. economic situation: “Vulnerabilities associated with funding risks were characterized as moderate. Domestic banks held significant quantities of high-quality liquid assets. Nonetheless, significant structural vulnerabilities remained at entities such as prime money funds, and new financial arrangements such as stablecoins.”
- On risk: “Some participants cited various potential risks to financial stability including the risks associated with expanded use of cryptocurrencies. A few participants highlighted the fragility and the general lack of transparency associated with stablecoins.”
Ultimately, it doesn’t look like the Fed is too keen on the crypto environment. These notes from the FOMC Minutes is more evidence that suggests regulation is coming soon to the cryptosphere.
Kashkari, FOMC Minutes Can’t Shake Bitcoin
Over the past 48-hours, Bitcoin has weathered the Fed-induced storm. Yesterday’s FOMC Minutes release has done little to shake BTC from above the $45,000 handle.
Overview: For now, the SEC and FED appear concerned about the risks cryptos pose. Really, the only question is how quickly the two will become involved in the cryptosphere on a large scale. Like I said in a Wednesday update, 2022 is likely to be the year of the U.S. crypto crackdown.