The Fed’s complicated relationship with cryptocurrencies thickened after the St. Louis branch of the Federal Reserve added four cryptocurrencies to its research database.
The four cryptocurrencies, which include Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC) and Bitcoin Cash (BCH), will now be included on the Federal Reserve Economic Database (FRED) as of Tuesday. Price data will be going back to 2014 for Bitcoin, and later dates for the other currencies.
The pricing data will be acquired from Coinbase’s exchange; hence the limited amount of currencies being tracked. The pricing data will be updated daily at 5 pm PST.
It is currently unknown whether the Fed branch will be adding more currencies as Coinbase adds them, which would warrant the addition of Ethereum Classic (ETC) in the near future.
The Fed has been hesitant to share any official opinions about cryptocurrencies as assets or technologies, but the St. Louis branch specifically has been positive about the future of digital currencies. The governor of the St. Louis Federal Reserve recently spoke about his views on cryptocurrencies at the Consensus conference in New York.
Although his Fed’s actions have been positive, his outlook on cryptocurrency’s future seems mixed. He stated that mass adoption of cryptocurrencies could cause the formation of a non-uniform currency system, which would make the economy less efficient.
“Cryptocurrencies may unwittingly be pushing in the wrong direction in trying to solve an important social problem, which is how best to facilitate market-based exchange,” St. Louis Fed Governor James Bullard said.
The St. Louis Fed also published an article recently that compared Bitcoin to the US Dollar, ultimately concluding that the two currencies are not much different. The reason that both currencies have a limited supply, are backed by no physical assets, are decentralized, and scarce. Although these comparisons are correct, their analysis fails to see the technological advantages offered by Bitcoin, which include faster digital transactions with lower fees than those offered by bank transfers or credit purchases.
Other branches of the Fed have shown more negative stances towards cryptocurrency, with the head of the Atlanta Fed warning young people to not invest in cryptocurrency, and the Fed in San Francisco claiming that Bitcoin’s true value is a mere $1,800 based on utility and mining costs.