1. Powell's "Digital Dollar Ban": A Pre-planned Financial Revolution?
On February 12, 2025, Federal Reserve Chairman Powell's remarks at a congressional hearing completely extinguished the market's last glimmer of hope for a "digital dollar" — "During my tenure, the Federal Reserve will never launch a central bank digital currency (CBDC)." This statement seemed sudden, but in reality, it had long been foreshadowed. Since the Federal Reserve released the "Digital Dollar Report" in 2022, discussions around CBDCs have been bouncing back and forth between "technological potential" and "policy risks," and Powell's "one-size-fits-all" approach undoubtedly pushed this debate to a climax.
Cryptocurrency analysts point out that Powell's stance is not only a technical conservatism but also a "defensive battle" against the underlying logic of the dollar system. His repeated emphasis that "the FedNow real-time payment system can meet demand" effectively positions the digital dollar as a "redundant product," suggesting that the Federal Reserve prefers to upgrade within the existing framework rather than disrupt the traditional monetary system.
2. FedNow vs CBDC: Is the Federal Reserve's "Alternative Solution" Really Sufficient?
The FedNow system, which Powell strongly advocates, is described as the "savior of real-time payments," but its functions significantly differ from the vision of a CBDC. FedNow only optimizes interbank clearing speed, while the core advantages of a CBDC lie in disintermediation and programmability — for example, reducing cross-border payment costs by 50% and shortening the time to seconds. However, the Federal Reserve seems more wary of the "side effects" of a CBDC:
- Bank Run Risk: If a CBDC becomes the "ultimate safe asset," deposits may flee banks en masse during a crisis, directly impacting financial stability;
- Privacy Black Hole: 43% of Europeans have listed privacy as a primary concern regarding the digital euro, and if the Federal Reserve issues a CBDC, it may face even more severe data monitoring controversies;
- Political Resistance: The Republican-led Congress has repeatedly questioned the "government control tendency" of CBDCs, and Powell's statement aligns perfectly with this trend.
Analysts sharply criticize: FedNow is merely a "painkiller," while a CBDC could have been a "scalpel." The Federal Reserve's choice reveals its fear of systemic change. ![Is the Federal Reserve's "Digital Dollar" Plan Completely Dead? Powell Explains Three Major Pitfalls and the "Unexpected Revelry" in the Crypto Marketaicoinfigure1](https://static.aicoinstorge.com/article/20250212/173932647081231.jpg "Is the Federal Reserve's "Digital Dollar" Plan Completely Dead? Powell Explains Three Major Pitfalls and the "Unexpected Revelry" in the Crypto Marketaicoinfigure1")
3. Spring for the Crypto Industry? Market Reactions and Future Landscape
Powell's "digital dollar ban" unexpectedly became a shot in the arm for the crypto market. On the day of the hearing, DeFi protocol trading volumes surged. This phenomenon is underpinned by two layers of logic:
1. Regulatory Vacuum Dividend: The Federal Reserve's clear stance against a CBDC means that private crypto assets will continue to dominate the innovation testing ground. Powell's previous statement that "banks can serve crypto clients" has been interpreted as a tacit acknowledgment of the industry's legitimacy;
2. Alternative Demand: If the digitization of the dollar stagnates, stablecoins (like USDT, USDC) may further fill the gaps in cross-border payments and inclusive finance.
However, beneath the revelry lies hidden concerns. Democratic lawmakers have criticized the $TRUMP coin, supported by Trump, as "suspected of interest transfer," while the Federal Reserve's regulatory framework for cryptocurrencies remains unclear. Although Powell has called for "improving the regulatory mechanism," the specific path is still ambiguous. ![Is the Federal Reserve's "Digital Dollar" Plan Completely Dead? Powell Explains Three Major Pitfalls and the "Unexpected Revelry" in the Crypto Marketaicoinfigure2](https://static.aicoinstorge.com/article/20250212/173932657037389.jpg "Is the Federal Reserve's "Digital Dollar" Plan Completely Dead? Powell Explains Three Major Pitfalls and the "Unexpected Revelry" in the Crypto Marketaicoinfigure2")
4. Global CBDC Race: What Does the Federal Reserve's "Absence" Mean?
As China's digital yuan pilot covers 260 million users and the Eurozone accelerates the promotion of the "digital euro," the Federal Reserve's conservative stance appears out of place. Analysts warn that this may lead to the dollar losing its edge in the digital currency era:
- Erosion of Cross-Border Payment Hegemony: The digital yuan has already connected multiple central banks through the "mBridge" project, while the dollar still relies on traditional channels like SWIFT;
- Weakening of Geopolitical Tools: The programmability of CBDCs can precisely execute sanctions or welfare distribution, and the Federal Reserve's absence may weaken the dollar's policy toolbox.
However, some argue that the Federal Reserve's "latecomer strategy" is actually a tactical retreat — avoiding early entry that exposes technical flaws while observing the trial-and-error experiences of other countries. ![Is the Federal Reserve's "Digital Dollar" Plan Completely Dead? Powell Explains Three Major Pitfalls and the "Unexpected Revelry" in the Crypto Marketaicoinfigure3](https://static.aicoinstorge.com/article/20250212/173932677844413.jpg "Is the Federal Reserve's "Digital Dollar" Plan Completely Dead? Powell Explains Three Major Pitfalls and the "Unexpected Revelry" in the Crypto Marketaicoinfigure3")
5. The Ultimate Question: Is Powell's Legacy a "Guardian" or a "Stumbling Block"?
Powell's term will end in 2026, and his decision to reject a CBDC is destined to become a controversial legacy. Supporters argue that he resisted the temptation of a "technological utopia," maintaining the stability of the financial system; critics accuse him of clinging to the old order, causing the U.S. to fall behind in the currency evolution race.
Regardless of whether the Federal Reserve takes action, the wave of digital currencies is irreversible. As private stablecoins and foreign CBDCs eat into the dollar's share, Powell's successor may face even tougher choices. ![Is the Federal Reserve's "Digital Dollar" Plan Completely Dead? Powell Explains Three Major Pitfalls and the "Unexpected Revelry" in the Crypto Marketaicoinfigure4](https://static.aicoinstorge.com/article/20250212/173932700624579.jpg "Is the Federal Reserve's "Digital Dollar" Plan Completely Dead? Powell Explains Three Major Pitfalls and the "Unexpected Revelry" in the Crypto Marketaicoinfigure4")
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