Fed Chair Jerome Powell has fallen in line with Trump’s pro-Bitcoin agenda.
Beaver Bullets:
- Fed Chair Jerome Powell has adopted a far less critical stance on Bitcoin, aligning with Trump’s pro-Bitcoin agenda. He also committed to never allowing a CBDC in the US.
- Japanese firm Metaplanet Inc. increases its Bitcoin reserves following the MicroStrategy / Saylor playbook.
- The Wyoming Highway Patrol explores a Bitcoin purchase.
Powell Bends the Knee to Bitcoin
The chairman of the U.S. Federal Reserve is sounding way less hawkish on Bitcoin since Trump’s re-election, making it sound like all systems go for the Bitcoin industry.
During a House Financial Services Committee hearing on Wednesday, a lawmaker challenged Jerome Powell with concerns about the “expansion of crypto” into the banking system. Rather than nodding along, the central banker pushed back on the idea that he should do too much to interfere with the merging of the two worlds.
“We don’t want to get in the way of banks serving perfectly legal crypto customers as long as they understand the risks,” answered Powell.
On the topic of Bitcoin custody offered directly by banks, Powell merely said that banks should be made aware of any risks involved – but nothing more.
“We don’t want to go so far as to overplay our hand on that,” he said. “I think we need to be mindful that many of these activities can very well be done inside of banks, and custody may well be one of them.”
For those unaware, Powell’s tone here is far more lax on Bitcoin than it has been in the past. In March of 2023, Powell was warning banks to be “taking great care” when dealing with crypto businesses, after several crypto-supportive banks collapsed due to bank runs. Yet recently publicized text from the Federal Reserve’s Internal Implementation Handbook also reveals that the Fed was strongly implying/pressuring banks not to interact with crypto firms, strangling them from banking access in a “conspiracy” termed Operation Chokepoint 2.0.
Another thing Powell used to consider? Central Bank Digital Currencies (CBDCs) – the antithesis of Bitcoin that would put absolute control and surveillance of your money fully into the hands of government.
Today he isn’t even thinking about implementing one. When asked by the Senate Banking Committee on Tuesday if he would commit to never allowing a CBDC in the U.S. during his time as chairman, he responded with a firm “Yes.”
Powell’s new tone is no coincidence. President Trump recently signed the crypto executive order, which explicitly banned federal agencies from trying to launch a CBDC. It was also designed to promote “fair and open access to banking services for all law-abiding individual citizens and private-sector entities alike.”
These new orders mean that Jay Powell has had to bend the knee to Trump, and by extension, bend the knee to Bitcoin. After all, Trump has warned Powell that he ought to fear consequences if he doesn’t fall in line with Trump’s wishes…
As a Beaver bitcoiner you might be thinking: “We don’t need banks or custody.. Isn’t this against what Bitcoin is all about?”
In many ways yes, Bitcoin and banks (as they exist today) are contradictory. But banking itself isn’t inherently evil. Rather it’s the ability to print unlimited amounts of money from nothing that has given rise to the absolute corruption of the entire legacy financial system.
With it’s fixed and known supply, a Bitcoin standard wouldn’t just change the incentives of banking, it would remove the ability to cheat. No more bailouts with taxpayer money. Actual consequences for an irresponsible bank that fails.
Remember, Bitcoin isn’t just money, it’s the best form of money the world has ever seen – so it’s only natural, if not inevitable – that banks are going to get involved.
So, this marks an important step forward for the overall adoption of Bitcoin: allowing banks to offer services around Bitcoin that their clients will desire.
The Bitcoin ETFs were the first example, and Bitcoin-based banking will be the next.
No one can predict how this plays out but one thing we know for sure.. Not your keys, not your coins.
Our mission at Beaver remains allowing more Canadians to buy bitcoin without trusting a custodian.
MetaPlanet Stacks More Sats
Japanese firm Metaplanet Inc. has successfully raised $25.9 million (¥4 billion) through zero-interest bonds to expand its Bitcoin holdings. The funds will be used to increase its Bitcoin reserves to 21,000 BTC by 2026, aiming to become one of Asia’s largest Bitcoin holders.
This strategic move is part of Metaplanet’s plan to hedge against economic uncertainties in Japan, including high debt and yen depreciation. The yen’s inflation rate rose to 3.6% as of December.
“The Company has strategically shifted its financial management approach to adopt Bitcoin as its primary reserve asset,” the company announced Thursday.
MetaPlanet is often called the “MicroStrategy of Japan” for adopting the exact financial strategy that the former has, but on a smaller scale, and in a separate stock market.
They’re not the only ones buying bitcoin, either.
The Wyoming Highway Patrol Says it Might Buy Bitcoin
The Wyoming Highway Patrol Association (WHPA) is exploring the addition of Bitcoin to its balance sheet, potentially becoming the first U.S. law enforcement association to do so.
“We are excited to explore Bitcoin as a network and asset, to evaluate ways it can further support our organization and its members,” WHPA vice president Austin Bluemel said.
This initiative is part of the “Get Off Zero” program by Proof of Workforce, aimed at educating labor unions and pension funds about Bitcoin’s benefits.
Wyoming Senator Cynthia Lummis has expressed support for this move, highlighting its alignment with the state’s pro-Bitcoin stance.
“This is so cool, tweeted Lummis on Wednesday. “The goal with this stuff is to help Americans access tools to realize and protect the full value of their effort, their blood, their sweat and their tears”.
All that said, one major BTC holder might be forced to sell its coins…
Tether May Have To Sell Its Bitcoin, Says JPMorgan
JPMorgan analysts suggested Wednesday that Tether may need to sell its Bitcoin holdings to meet proposed U.S. stablecoin regulations, as only 66-83% of its reserves currently comply.
“Under the proposed bills, Tether would have to implicitly replace its non-compliant assets with compliant assets,” the analysts’ latest report reads. “This would imply sales of their non-compliant assets (such as precious metals, Bitcoin, corporate paper, secured loans and other investments) and purchases of compliant assets such as T-bills,” it added.
Tether currently fully backs its US dollar stablecoin with US T-bill and cash equivalents, with surplus reserves held in BTC bought using the firm’s ample profits. The firm’s latest filings suggest it owns 83,758 BTC.
As usual, Tether CEO Paolo Ardoino pushed back on the FUD, attacking the JP Morgan analysts. “JPM analysts are salty because they don’t own Bitcoin,” he tweeted Thursday.
Stay humble,
Andrew
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