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Crypto should be viewed as its own asset class and not lumped in with gold (GC=F) as so often is the case, according to San Francisco Fed president Mary Daly.
“I see crypto as a complicated thing, and the service we need to do for everyone is really unpack what we mean and call it what it is once we’ve done that,” Daly said on Yahoo Finance’s Opening Bid podcast (see video above or listen below). “It can be a currency. It could be a medium of exchange. … It could be a stock — an asset to hold value or sometimes lose value. We just have to define those terms.”
“So I don’t think of it as like gold,” Daly added. “It has properties like gold sometimes, but I don’t think of it like that.”
Daly’s assessment differed slightly from that of Fed Chair Jerome Powell, who energized the crypto community earlier this month with his comments on bitcoin (BTC=F).
“People use bitcoin as a speculative asset,” Powell said at the New York Times DealBook conference. “It’s just like gold, only it’s virtual, it’s digital. People are not using it as a form of payment or as a store of value. It’s highly volatile. It’s not a competitor for the dollar; it’s really a competitor for gold.”
Daly echoed Powell’s view that crypto is not yet ready for currency status, as some crypto bulls say is warranted at this point in its life cycle.
“The property it needs is that it has to grow as the economy grows,” Daly explained. “So its value doesn’t change just because people want it. So when more people want a dollar bill, the dollar bill doesn’t rise in value. What causes the dollar to fluctuate is the economy and how fast our growth is relative to other countries. So that is a property it will have to perfect for it to be a currency.”
While crypto appears to be a long way from getting stamped as a currency by Congress, it hasn’t stopped the momentum behind the bullish trade in various digital assets.
Bitcoin, the most popular crypto, has continued to outperform since the Nov. 5 election of Donald Trump, breaking through the $100,000 level for the first time on Dec. 4. Bitcoin prices are up 38% since Election Day and are 106% higher this year.
Crypto-linked stocks such as Coinbase (COIN) and Robinhood (HOOD) have surged 45% and 204%, respectively, year to date.
The warming sentiment toward crypto also includes recent investments from entities that typically favor the more traditional stocks and bonds options. In May, Wisconsin’s pension fund added bitcoin to its holdings by purchasing more than $160 million in shares of two new funds approved by regulators earlier this year.
