Bitcoin

Likely New York Fed president says bitcoin 'doesn't pass the basic test' for a currency

Key Points
  • John Williams, expected to be the next head of New York Fed, said bitcoin "doesn't pass the basic test of what a currency should be."
  • He spoke as bitcoin enjoyed a nice rally Friday but still remains well below the price peak it hit in 2017.
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The central banker expected to be the next head of the New York Fed doesn't think much of bitcoin and other cryptocurrencies.

"Cryptocurrency doesn't pass the basic test of what a currency should be," John Williams, currently the head of the San Francisco Fed but the nominee for the top slot in New York, said during a speech Friday.

A currency should be "basically something with a store of value," he said, adding that currencies need to be "elastic" to be able to support varying economic and financial conditions.

"The setup or institutional arrangement around bitcoin and other cryptocurrencies, first of all they have problems with fraud, problems with money laundering, terror financing. There's a lot of problems there," Williams added.

Williams spoke as bitcoin was enjoying a nice rally Friday. But the price has been strikingly volatile, peaking near $20,000 in 2017 before tumbling this year and last trading around $8,500.

As he has spent most of his career in central banking, Williams acknowledged he is "very biased" when it comes to the crypto issue. Williams likely will take the New York Fed reins when current President William Dudley leaves in June.

"The idea of the supply of currency and thinking about currency really belongs more in the sphere of government and central banks," he said. "My view is it's really more of a promise of technology."

WATCH: Nobel laureate Robert Shiller weighs in on the bitcoin craze.

Bitcoin craze is more psychological than economic: Nobel laureate
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Bitcoin craze is more psychological than economic: Nobel laureate