Crypto Market Fear Subsides Following Fed Announcement that ‘It Will Not Ban Crypto’

October 02, 2021, 10:00 AM AEST - 2 weeks ago

During the US House Financial Services Committee meeting on September 30, the chairman of the Federal Reserve, Jerome Powell, confirmed that he doesn’t have any intention to ban private cryptocurrency. 

For months now, many US crypto investors have been concerned that the government could ban bitcoin and other cryptocurrencies on the issuance of a central bank digital currency, as seen with China. This was based on Powell’s comment in July, where he precisely said: You wouldn’t need stablecoins, you wouldn’t need cryptocurrencies if you had a digital US currency.

However, in the recent meeting, Powell claimed he had “misspoken”. In his words, there is no intention to ban cryptocurrencies in the US; however, stablecoins need to be regulated. 

Stablecoins are like money market funds, they’re like bank deposits, but they’re to some extent outside the regulatory perimeter, and it’s appropriate that they be regulated.

Jerome Powell, US Federal Reserve chairman

China Took a Different Approach to Crypto

Evidently, the Chinese government’s approach to crypto is similar to the previous statement made by the US FED chairman. While China is in the pilot phase of testing its long-planned central bank digital currency, it has prohibited the trading, investing, and use of private cryptos in the country. Several mining pools and exchanges have ceased supporting users from China following the latest announcement by the central bank.

Nevertheless, the crypto market was pleased with Powell’s clarification, as bitcoin and other crypto began to spike thereafter. Just a day after the FED chairman clarified his previous statement, the price of bitcoin spiked to nearly US$48,000, resulting in the liquidation of over US$47 million short positions within an hour.

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