Dudley criticized the federal Bitcoin reserve plan proposed by Donald Trump in his presidential campaign, arguing that this plan would not benefit most Americans and could lead to economic instability.

In a column published in Bloomberg, Dudley acknowledged that Bitcoin being an easy-to-carry and decentralized asset provides diversification benefits for some investors.

However, he emphasized that Bitcoin’s volatility is high, transaction speeds are slow, and it has limited use in the real world, and that these factors do not make Bitcoin usable as a national reserve.

Dudley stated that Bitcoin is “almost unacceptable as money”, stating that its lack of widespread acceptance as a means of payment and its sensitivity to loss make it not a practical reserve alternative.

Dudley pointed out that Bitcoin’s volatility, that is, its rapid change in value, makes it impossible to use it as a reliable reserve asset. He said that since Bitcoin is not accepted as a means of payment and carries the risk of depreciation, it would be extremely risky for it to function as a national reserve asset.

Dudley stated that Bitcoin needs to gain more trust in order to be used as a means of payment and become a part of the economy, but he does not think this is possible.

Dudley also stated that the idea of ​​establishing a Bitcoin reserve could lead to financial concerns. He said such a plan would require the government to increase its borrowing or print more money, which could fuel inflation.

He also noted that while establishing a Bitcoin reserve would benefit existing Bitcoin holders by inflating Bitcoin prices, it would not provide much value to most Americans.

In this way, he stated that the government’s efforts to increase its assets by establishing a Bitcoin reserve will only enrich a certain segment and not benefit the wider public.

Dudley also pointed out that if the government implements this plan, the state will hold a volatile asset that loses value and does not generate income.

Instead, Dudley called on the Trump administration to develop comprehensive regulations for the cryptocurrency industry. Dudley stated that stablecoins should be fully backed by federal assets, the legal status of digital tokens should be clearly determined, and illegal activities should be prevented to protect consumers.

While Dudley acknowledged that cryptocurrency technology has the potential to make improvements to the financial system, he emphasized that without strong regulations, fraud and abuse in the industry will continue.

While Dudley stated that using Bitcoin as a reserve asset would be a risky and potentially economic destabilizing step, he re-emphasized the importance of establishing a clear and comprehensive regulatory framework for the cryptocurrency industry.

He stated that in this way, integrating innovations in the sector into the financial system will be safer and more sustainable.