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The bitcoin price, down around 70% from its late 2021 all-time high, has crashed back this year as the Federal Reserve wrestles with soaring inflation by hiking interest rates and cutting stimulus measures. The Fed’s hawkish policy has also hit the price of top ten cryptocurrencies ethereum, BNB
Now, the Federal Reserve has said cryptocurrencies such as bitcoin, ethereum and others could present “potential opportunities” to banks, calling on Wall Street to put systems in place to deal with digital assets as the market braces for the institutional investor “floodgates” to open.
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“The emerging crypto-asset sector presents potential opportunities to banking organizations, their customers, and the overall financial system,” the Fed wrote in a statement alongside a 49-page document that recommends companies notify Fed regulators before engaging with bitcoin and cryptocurrencies.
“Crypto-asset-related activities may also pose risks related to safety and soundness, consumer protection, and financial stability,” the Fed added. The bitcoin and crypto market has remained extremely volatile despite Wall Street’s increasing willingness to support the likes of bitcoin ethereum, BNB, XRP, solana, cardano and dogecoin.
Earlier this month, the world’s largest asset manager BlackRock sent shockwaves through the crypto industry when it announced a partnership with major crypto exchange Coinbase
The Fed this week also issued long-awaited guidance for how it will evaluate applications from cryptocurrency companies that want to use the Fed’s accounts and payment services.
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“The new guidelines provide a consistent and transparent process to evaluate requests for Federal Reserve accounts and access to payment services in order to support a safe, inclusive, and innovative payment system,” Fed vice chair Lael Brainard said in a statement.
The bitcoin and crypto market has been more or less trading sideways since finding a floor in mid-June, though the ethereum price has rocketed higher as a “hundred-pound gorilla gets closer by the day.”
“Bitcoin has a hard time going anywhere at this moment, but looking at it from a long-term perspective, this seems to be an accumulation point and whether bitcoin drops further doesn’t much matter for the millions who believe in it,” Martin Hiesboeck, head of blockchain and research at crypto platform Uphold, said in emailed comments.
“The fact it hasn’t dropped significantly over the past weeks as we digested some really bad news is a turning point.”