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According to San Francisco Federal Reserve President Mary Daly, cryptocurrencies should be viewed as their own asset class and not lumped together with gold (GC=F), as is often the case.
“I look at cryptocurrencies as a complicated thing, and the service we need to provide for everyone is to really unravel what we mean and call it what it is once we’ve done it,” Daly said on Yahoo Finance’s Opening Bid podcast (watch video above) . or listen to it below). “It could be a currency. It could be a medium of exchange… It could be a stock, an asset to hold value or sometimes lose value. We just have to define those terms.”
“So I don’t consider it gold,” Daly added. “Sometimes it has properties like gold, but I don’t see it that way.”
Daly’s assessment differed slightly from that of Federal Reserve Chairman Jerome Powell, who energized the crypto community earlier this month with his comments on bitcoin (BTC=F).
“People use bitcoin as a speculative asset,” Powell said at the New York Times’ DealBook conference. “It’s like gold, only it’s virtual, it’s digital. People don’t use it as a form of payment or as a store of value. It’s very volatile. It’s not a competitor for the dollar; it’s actually a competitor for gold.” .
Daly echoed Powell’s view that cryptocurrencies are not yet ready to become currency, as some cryptocurrency bulls say is justified at this point in their life cycle.
“The ownership needs to grow as the economy grows,” Daly explained. “So its value doesn’t change just because people want it. So when more people want a dollar bill, the dollar bill doesn’t increase in value. What causes the dollar to fluctuate is economics and how quickly which our growth is relative to other countries. So that is a property that will have to be perfected for it to be a currency.
While cryptocurrencies appear to be a long way from being approved as a currency by Congress, they have not stopped the momentum behind the bullish trading of several digital assets.
Bitcoin, the most popular cryptocurrency, has continued to outperform since Donald Trump’s election on November 5, surpassing the $100,000 level for the first time on December 4. Bitcoin prices are up 38% since Election Day and are 106% higher this year.
Cryptocurrency-linked stocks like Coinbase (COIN) and Robinhood (HOOD) are up 45% and 204%, respectively, so far this year.
The warming sentiment toward cryptocurrencies also includes recent investments from entities that typically favor more traditional stock and bond options. In May, Wisconsin’s pension fund added bitcoin to its holdings by purchasing more than $160 million in shares of two new funds approved by regulators earlier this year.
