Federal Reserve committee calls bitcoin a "boon" for commerce

Home » Federal Reserve committee calls bitcoin a "boon" for commerce
Image source: https://www.flickr.com/photos/zcopley/

Image source: https://www.flickr.com/photos/zcopley/

Thus far, the Federal Reserve has had a hands-off approach to bitcoin, regularly citing its lack of jurisdiction over currency-like commodities and non-state backed currencies. But that doesn’t mean the Fed isn’t paying attention to bitcoin’s rapidly growing impact on domestic and global finance. At a meeting of the Fed’s Federal Advisory Council (FAC), the central bank’s advisers briefly discussed the rise of bitcoin, and its potential as a disrupting force to the global economy.

Surprisingly, the FAC found that bitcoin’s promise far outweighed its risks, noting. (Meeting minutes PDF.)

Bitcoin does not present a threat to economic activity by disrupting traditional channels of commerce; rather, it could serve as a boon.”

The report suggests that one near-term impact could be “driving capital flows from the developed to the developing world,” which is likely to have a significant impact on global consumption, driving up demand and generally stimulating the world’s economy.

The FAC’s larger conclusion was that bitcoin was “more curiosity than threat” at the moment, and that the Fed should only currently be concerned about diminishing bitcoin’s illicit use and bolstering consumer protections. The report did note, however that bitcoin’s eventual use as a “circumvention of currency controls” could be a point of concern for many governments, such as China and Cyprus.

The FAC suggested eventual regulation, but did not stress a timeline or any specific urgency for the creation of these new rules. It also suggested “consistency across geographic areas is necessary to preempt regulatory arbitrage,” and the reform of U.S. policies towards bitcoin, as it is treated as both a property by the IRS and a currency under FinCEN rules, greatly confusing would-be regulators.
as is consistency with regulations governing existing payment networks.

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