The Federal Reserve Might Explore A Digital Currency, Dudley Still 'Skeptical' Of Bitcoin

The hottest investment of 2017 is bitcoin and other digital currencies, and the cryptocurrency craze has now apparently captured the attention of the Federal Reserve. William Dudley, president and CEO of the Federal Reserve Bank of New York, said the Fed is contemplating its own digital currency.

But before investors get too excited at the possibility of a federal cryptocurrency, Dudley said the currency’s potential launch wouldn’t be happening any time soon. He also took the opportunity to cast some shade on bitcoin, which rallied more than $1,000 on Wednesday just one day after topping $10,000 for the first time ever.

More Bitcoin Futures

The latest parabolic move may be driven in large part by the news that the Nasdaq plans to launch bitcoin futures trading in the first half of 2018. Lat month, CME Group Inc CME announced its own launch of bitcoin futures.

Traders have had limited access to bitcoin. The SEC has yet to approve a bitcoin ETF for listing on a major exchange due to regulatory concerns.

“I would be, at this point, pretty skeptical of bitcoin,” Dudley said.

Dudley isn’t the only Fed member to question bitcoin’s meteoric rise. Back in September, Philadelphia Fed President Patrick Harker said the U.S. dollar has one key element that bitcoin will never have.

"The paper that's in your pocket, that we call money, only has value because we believe it has value, because we believe the government stands behind it,” Harker said.

Investors certainly don’t seem to have trust issues when it comes to bitcoin in 2017. The OTC-listed Bitcoin Investment Trust GBTC surges another 18.1 percent on Wednesday and is now up an incredible 1,310 percent year-to-date.

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