Many analysts are working to discover why it is that bitcoin has suddenly taken such a nasty price stumble. The world’s number one digital currency by market cap has fallen below the $40,000 mark after hovering there for the past several weeks, and it looks like it may be because BTC is in line to face some stiff competition from the Federal Reserve.
The Federal Reserve Wants to Issue a New Cryptocurrency
The Fed has issued a statement explaining that it has been looking into the possibility of issuing a national central bank cryptocurrency. The Federal Reserve has made it clear that it has no plans to move forward on issuing the currency unless it has support from both Congress and the White House. However, it is posing the situation to the public and asking for comments.
The Federal Reserve is now involved in a study that aims to find out the benefits of said bank-issued currencies, and according to a new report, the advantages are quite strong. More than anything, however, the situation places the U.S. in a rather unique position, primarily because it seemed like the country would never take this route given how loyal and dedicated it is to the U.S. dollar.
Up to this point, it was clear that only China was willing to step into the route of issuing a national form of crypto. In 2019, the country pulled back the curtain on the digital yuan, a virtual version of the fiat currency that everyone there uses for purchases. The coin has gone through a heavy testing stint and has made some people wonder what – or even if – other nations would follow suit. It seems like the U.S. could be next in line.
However, while the news is interesting, it appears to have produced some ugly results for BTC, which fell by more than $2,000 following the announcement. The report detailing the study reads:
The Federal Reserve does not intend to proceed with issuance of a CBDC without clear support from the executive branch and from Congress, ideally in the form of a specific authorizing law.
What Will This Do to the Industry?
The situation is a bit of a conundrum in that while perhaps a route like this is inevitable for many developed countries – after all, we’ve been hearing for years that crypto is the way of the future – many true digital currency traders may not be intrigued by the idea of a national cryptocurrency being issued by a bank given that this goes against everything crypto stands for.
Digital currency was initially designed to take power away from financial institutions and give it back to the people. These assets were built to give people a little more say in their lives and financial decisions. If these currencies suddenly become issued or controlled by banks, we can expect to see these freedoms start to dissipate, and the crypto world could become as centralized as traditional finance.
Source: https://www.livebitcoinnews.com/the-federal-reserve-may-unveil-a-national-cryptocurrency/