Cryptocurrencies haven't reached the status of payment mechanism, they are vehicles of speculation, said Federal Reserve Chairman Jerome Powell on Wednesday.
Comparing cryptocurrencies with gold, the Fed chair said that for a long time, humans have given "gold a special value that it doesn't have" as an industrial metal. His comments came on the day when Coinbase, a cryptocurrency exchange, listing on Nasdaq.
Coinbase' shares opened at $381 on Wednesday, soared to $429, then dropped to $328 over the next hour. Despite the dizzying drop, the shares were well above the $250 price assigned by Nasdaq on Tuesday.
Powell also said that Fed will likely taper its bond purchases before considering hiking interest rates. The Fed has made significant progress toward its goals from last December when it announced its guidance, he noted.
"That would in all likelihood be before -- well before -- the time we consider raising interest rates. We haven’t voted on that order but that is the sense of the guidance," Powell said at a virtual event hosted by the Economic Club of Washington.
Earlier, on CBS' '60 Minutes' show, Powell had said that the US economy is at an inflection point with stronger growth and hiring ahead of rising vaccination and accommodative monetary policy stance. However, he highlighted multiple risks as well.
"The principal risk to our economy right now really is that the disease would spread again. It's going to be smart if people could continue to socially distance and wear masks," the Fed chair said.
Policymakers will wait until inflation is back at the sustainable 2 percent fringe and for labor market recovery to end before considering raising interest rates. It is a combination that is unlikely to take place before 2022, he said. According to Fed's forecast in March, interest rates will be held near zero through 2023.
The US Fed will enter its traditional blackout period on Friday night ahead of the April 27-28 meeting of the Federal Open Market Committee.