Fed has 'no authority' over bitcoin - Yellen

Thursday 27 February 2014 18.43
Janet Yellen suggested that the US Congress could establish a legal structure for bitcoin if it wanted
Janet Yellen suggested that the US Congress could establish a legal structure for bitcoin if it wanted

The US Federal Reserve has no authority to regulate or otherwise deal with the crypto-currency bitcoin, Fed Chair Janet Yellen has said.

Ms Yellen said in a Senate hearing that the banks under its regulatory purview were not involved with bitcoin, and so the Fed had no powers over its use.

"This is a payment innovation that is taking place entirely outside of the banking industry," she said.

"The Fed doesn't have authority with respect to bitcoin."

Ms Yellen pointed to other US regulators, including the Treasury, watching the bitcoin sector for potential money laundering and other criminal uses of the digital currency.

However, she stressed, "it's not so easy to regulate bitcoin" because it is used outside the banking system, and has no centralised authority behind it as do other normal "fiat" currencies.

Congress could, however, get involved to set up a legal structure for it, if it wants to, she suggested.

Any bitcoin regulation 'should be international'

Any regulation of bitcoin should involve international cooperation to avoid loopholes, Japanese vice finance minister Jiro Aichi has said.
              
Commenting on the closure this week of Tokyo-based Mt Gox, once the world's biggest exchange for the bitcoin virtual currency, Aichi said the ministry would respond to the problems "if necessary", after finding out exactly what happened.
              
"It's not just the Ministry of Finance; many other agencies are related," Aichi told a news conference.

"As for its legal position, a currency (under Japan's jurisdiction) would be coins or notes issued by the Bank of Japan. At the very least, we can say bitcoin is not a currency."