Federal Reserve chair Jerome Powell said he sees Bitcoin and other cryptocurrencies more as gold replacements than something that could take the place of the dollar.
Powell said Bitcoin and other cryptocurrencies were volatile and speculative assets that served to replace another speculative asset: gold. He said that they weren't useful stores of value or used in payments.
"Crypto assets are highly volatile—see Bitcoin—and therefore not very useful as a store of value, and they're not backed by anything," he said.
He continued: "They're more of an asset for speculation, so they're not particularly in use as a means of payment. It's more a speculative asset. It's essentially a substitute for gold rather than for the dollar."
Powell made the remarks at a conference organized by the Bank for International Settlements, known as the central bank for central banks.
Speaking at the same conference, Powell said so-called central bank digital currencies, or CBDCs, would continue to be the focus of work at the Federal Reserve, but would take time to develop.
Powell said several elements would need to be in place to move CBDCs forward, including new legislation, the support of the White House and broad public support. "You can expect us to move with great care and transparency with regard to developing a central bank digital currency," he said.
Janet Yellen, the U.S. Treasury Secretary, has said an American CBDC could help citizens who don't have access to the banking system. Powell has previously said a CBDC would have to be integrated into existing payment systems alongside cash.
The Federal Reserve Bank of Boston has been working on CBDC research and will unveil its work as soon as July, Bloomberg reported. Payments firms, from credit card networks to banks, are watching developments closely as it could increase costs and eat into their profits.
Central banks around the world are developing their own CBDC projects rapidly. "The fire has been lit," Josh Lipsky, a director of an Atlantic Council unit that has gathered global central banks to work on CBDCs, told Bloomberg.