Reuters

The Federal Reserve's chairman, Jerome Powell, just described bitcoin as a "speculative store of value" like the way gold is used.

It's a win for proponents of the theory that the US trade war has spurred investors to buy bitcoin as a way to diversify their portfolios.

Later on Thursday, President Donald Trump slammed bitcoin and other cryptocurrencies, saying they should be "subject to all banking regulations."

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Federal Reserve Chairman Jerome Powell has waded into the debate about bitcoin's role in the global financial system, adding weight to the theory that it's a safe-haven option for investors.

When answering questions before the US Senate banking committee on Thursday, Powell was asked: "If a cryptocurrency system became prevalent throughout the globe, would that diminish or remove the need for a reserve currency?"

Powell replied: "Things like that are possible, but we really haven't seen them, we haven't seen widespread adoption. Bitcoin is a good example. Really almost no one uses bitcoin for payments — they use it as an alternative to gold. It's a store of value, a speculative store of value, like gold."

It's a win for proponents of the theory that the US trade war with China and US disputes with Iran, Mexico, Germany, and other countries have spurred investors to buy bitcoin as a way to diversify their portfolios.

Read more: 5 theories behind bitcoin's dizzying rally above $12,000

"As the geopolitical situation remains so uncertain, strategic investors are still looking at bitcoin and Ethereum as uncorrelated with centralized assets, so they provide a quasi safe-haven option." said Marcus Swanepoel, the CEO of Luno, a cryptocurrency platform.

Some have poured water on that theory: A recent study found cryptocurrencies to be vulnerable to the same market forces as conventional assets.

Powell added on Thursday: "People have been talking about this [removing a reserve currency] since cryptocurrencies emerged, and we haven't seen it, but that's not to say we won't see it. But if we do see it, we may return to an era in the United States where we saw many different currencies in the national banking era."

Powell's remarks came before President Donald Trump slammed cryptocurrencies on Thursday, saying in a tweet: "I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air."

The president also said Facebook's coming cryptocurrency, libra, would be subject to the same banking regulations as other national or international banks.

He added: "Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity."

Powell has spoken about cryptocurrencies before. Last month, the Fed chair said Facebook's libra would be held to a high standard in terms of regulation.

"Given the possible scale of it, I think that our expectations — from a consumer-protection standpoint, from a regulatory standpoint — are going to be very, very high," Powell said after a talk at the Council on Foreign Relations in New York.

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