By Reuters|Posted April 06, 2020 06:15:33The US Federal Reserve Board has announced plans to allow banks to accept cryptocurrency as payment, making it the first nation to offer it to consumers.
In a move likely to upset some bitcoin users who fear the move could drive up the price, the US central bank said in a statement that banks would no longer require customers to verify the legitimacy of their bitcoins before using the cryptocurrency to make payments.
In January, the Federal Reserve Bank of New York also announced plans that would allow banks in the US to accept bitcoin.
The move was hailed by some bitcoin advocates who fear a rise in price could cause a financial crisis for banks, who are the main investors in the virtual currency.
Bitcoin, the virtual cryptocurrency which has gained popularity as an alternative to traditional financial institutions, has surged in value in recent months, gaining more than 200 percent this year.
In February, US President Donald Trump called bitcoin “a very dangerous asset class”.
The move is expected to be a blow to the cryptocurrency’s popularity, with bitcoin prices reaching a record high in March.
However, bitcoin enthusiasts argue that a move by the central bank to allow the use of cryptocurrency is a step in the right direction.
“If banks are allowed to accept the crypto, it will lead to more people using cryptocurrencies and ultimately increase the demand for physical cash, which will help keep prices down,” said Andreas Antonopoulos, the founder of the popular bitcoin trading platform Coinbase.
“The only question now is how many people will use it, how much.”
The move by Fed is likely to further boost bitcoin prices, with the value of the currency currently hovering around $4,000 per coin, according to Coinbase.
But bitcoin enthusiasts have warned that the move is not the only way to bring down prices, as banks have already begun to accept cryptocurrencies.
The central bank will issue new rules on Friday to ensure that banks are compliant with the new rules.