FORTUNE -- Bitcoin enthusiasts have had a rough week. The collapse of the world's largest bitcoin exchange, Mt. Gox, shook investors faith in the currency, sending the price of bitcoin to a low of $418.78 on Feb. 25 from a high of $1,151 just a few months before.
The currency has since recovered some of that lost value, but the incident has left many wondering about the future of the world's most famous cryptocurrency. One thing is for sure, though: the biggest threat to bitcoin isn't from the failure of private bitcoin-related institutions but the chance that public regulators like the Federal Reserve will crack down hard with stifling regulations.
MORE: How Mt.Gox went down
That's why bitcoin boosters should have let out a sigh of relief when Fed Chair Janet Yellen said in no uncertain terms that her institution will not be regulating the currency anytime soon. "It's important to understand that this is a payment innovation that's happening outside the banking industry," Yellen said at a Senate Banking Committee hearing Thursday morning. "The Federal Reserve simply does not have the authority to regulate bitcoin in any way."
The answer came in response to West Virginia Senator Joe Manchin's questions about bitcoin, which belied intense distrust of the currency. Manchin called bitcoin an "unstable currency" that he believes is being used mostly for illegal activities. Manchin was seemingly disappointed with Yellen's statement that the Fed had no authority to regulate bitcoin, saying he believed there would be an intersection between bitcoin and Fed-regulated banks in the near future.
Yellen didn't budge, telling Manchin that if he wanted further oversight of the currency, Congress could take action to require it. Otherwise, she said, any regulation would be under the purview of the Justice Department and the Treasury Department.
Instead of just looking at inflation, the Fed should consider the gap between income and inflation. And the gap is wide.
By Sheila Bair and Preston Cooper
FORTUNE -- When the Fed meets to decide its monetary policy on Wednesday, Jan. 29, we believe it should continue tapering its bond buying program and let interest rates rise. Why? Low interest rates and low inflation are having a negative impact on the MOREJan 29, 2014 5:00 AM ET
The Fed wants to keep long-term yields depressed, but its policies are riddling the market with risk.
FORTUNE -- Last Wednesday, at a conference in Cambridge, Mass., Ben Bernanke sought to clarify the statements that shocked the markets just three weeks earlier. This time, the Federal Reserve Chairman reassured his vast, anxious audience that his pledge to start shrinking the Fed's $85 billion in monthly purchases of long-term bonds, the latest MOREShawn Tully, senior editor-at-large - Jul 16, 2013 8:00 AM ET
Fed votes to up the amount of capital banks have to have to cover loan losses, but leaves rules for subprime mortgages mostly in place.
FORTUNE -- The Federal Reserve voted Tuesday to approve rules that will require banks to hold more capital against the loans they make or risky assets they buy. The rules, proposed in the Dodd-Frank banking reform law, are a result of the financial crisis, when a MOREStephen Gandel, senior editor - Jul 2, 2013 10:18 AM ET
Friday's virtuous news cycle needs to continue if the U.S. economy is to overcome headwinds from Congressional dysfunction and Europe's malaise.
By Mohamed El-Erian
FORTUNE -- Most newscasts led their Friday evening shows with the record highs for the stock market and a monthly jobs report that exceeded expectations. Both bits of good news speak to an economy that continues to heal gradually. The question now, and it is an important MOREMay 6, 2013 6:45 AM ET
Fed chairman Ben Bernanke gave a much-anticipated speech in Jackson Hole this morning, where he basically told D.C. politicians that they need to get their house in order. In other words, this was more about fiscal policy than monetary policy.
Here is the full text of his speech:
Good morning. As always, thanks are due to the Federal Reserve Bank of Kansas City for organizing this conference. This year's topic, long-term economic MOREDan Primack - Aug 26, 2011 10:38 AM ET
What do you have to do to get slapped with the Federal Reserve's biggest-ever consumer-protection fine?
You have to rip off mortgage borrowers by the thousand. The Fed alleges Wells Fargo (WFC) did just that during the housing boom, bilking "possibly more than 10,000" out of sums reaching as high as $20,000 by slapping them with high-cost loans when they would have qualified for cheaper ones.
The Fed fined Wells $85 million MOREColin Barr - Jul 20, 2011 5:41 PM ET
Hoping Aug. 2 will come and go uneventfully? Read Wednesday's comments from Philadelphia Fed President Charles Plosser and weep.
Plosser (right) says the Federal Reserve is gearing up for a possible U.S. default should the loons in Congress fail to raise the debt ceiling. He stresses in an interview with Reuters that he isn't predicting this baleful outcome, but he doesn't underplay how quickly a default might spin out of control.
The MOREColin Barr - Jul 20, 2011 5:05 PM ET
How low would stocks have to go to bring Ben Bernanke off the sidelines?
A 17% drop in the U.S. blue chips would probably suffice, say big fund managers surveyed this month by Bank of America Merrill Lynch.
The S&P 500 would have to hit 1100 to get the Fed buying more bonds to prop up domestic demand for goods and services, according to the survey of 265 managers overseeing nearly $800 MOREColin Barr - Jul 20, 2011 9:52 AM ET
Why Greece's bailout may not prevent a Continental credit crisis and another global economic slowdown.
The Greek Parliament approved a tough austerity plan so that the country could get money from the European Union and the International Monetary Fund, including the rest of the bailout hammered out last year and a second aid package. Europe's officials have now spent nearly $270 billion to keep Greece going, signaling that they will spend whatever it MOREKatie Benner - Jun 30, 2011 1:21 PM ET
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