Yellen dismisses Federal Reserve responsibility to regulate Bitcoin

Techspot said that an article on the Wall Street Journal chronicled the ongoing debate about Bitcoin regulation by US authorities. In her testimony before the Senate Banking Committee, Federal Reserve Chairwoman Janet Yellen confirms the agency's hands-off approach to the controversial asset.

"The Federal Reserve simply does not have authority to supervise or regulate bitcoin in any way. This is a payment innovation that is taking place entirely outside the banking industry and to the best of my knowledge there is no intersection at all (between bitcoin and banks that the Fed can oversee)."

Yellen's comments were noted considering the clamor for authorities all over the world for an reaction after popular virtual money exchange Mt Gox shuttered this week and filed for bankruptcy protection in Japan on Friday. WSJ said that the shutdown of Mt Gox was considered to be the biggest setback in Bitcoin's five-year history, and was considered unexpected by many of its supporters.

Techspot said Yellen's line on reasoning regarding the Fed's hands-off policy was that the virtual currency as a payment method takes place outside of the banking industry, wherein the Fed has oversight. When committee member Sen. Joe Manchin probed further about the Fed's role with Bitcoin regulation, she said that the virtual currency market has no central issuer or network operator to be regulated.

""it certainly would be appropriate, I think, for Congress to ask questions to what the right legal structure would be (for overseeing the new currency)," she added.

On the other hand, Techspot said in its report that it did not see any reason why Bitcoin could not come back from its latest setback. Regarding its movement to that of physical currency, the report said that Bitcoin could be relied on rebounding from its latest low, especially when several industry leaders assured investors in a joint statement that the virtual currency remains strong.

Tags

Federal Reserve Chairwoman Janet Yellen, Bitcoin, Mt Gox shutdown

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