Federal Reserve Chair Janet Yellen: Fed Has No Authority To Regulate Bitcoin

If you were worried about the Federal Reserve trying to step in to regulate Bitcoin, breathe easy: Its leader doesn’t think that the Fed has the authority to do so.

Federal Reserve Chairwoman Janet Yellen was plain on the matter: “The Federal Reserve simply does not have authority to supervise or regulate [B]itcoin in any way.” She went on to call Bitcoin “a payment innovation that is taking place entirely outside the banking industry.”

Her remarks, made today before the Senate, will help set the tone for potential future regulation of Bitcoin. In Yellen’s view, Congress should work on the issue: “it certainly would be appropriate, I think, for Congress to ask questions about what the right legal structure would be for virtual currencies that involve nontraditional players.”

Bitcoin has recently taken hits following the demise of the Mt.Gox exchange. However, it’s worthwhile to keep in mind that the core abstract for Bitcoin is its lack of government control and regulation.

Recently, Senator Joe Manchin spoke negatively about Bitcoin. Warning that “Americans will be left holding the bag on a valueless currency,” the Senator “is calling for either strict regulation or an outright ban” on Bitcoin. Other countries have taken restrictive measures towards cryptocurrencies, so the option isn’t beyond the pale.