Former OCC official says crypto has backing but dollar ‘may not’

Brian Brooks, former acting comptroller of the currency of the United States Office of the Comptroller of the Currency, has claimed that cryptocurrencies like Bitcoin (BTC) have some backing, while the U.S. dollar may not have any.

Brooks gave his remarks in a CNBC Squawk Box interview with Joseph Kernen to unpack recent Bitcoin-related remarks by the U.S. Federal Reserve chair Jerome Powell. Earlier this week, Powell argued that cryptos like Bitcoin are “essentially a substitute for gold” but at the same time they are “not backed by anything.”

CNBC host Kernen pointed out that gold has historically been seen as a store of value, expressing confusion over Powell’s comments, stating. “He just said it’s like gold but not a store of value. Does he not think that gold is a store of value?”

In response, Brooks said that there are many reasons why people have flocked to Bitcoin over the past year, including the Fed dramatically increasing the dollar supply. “So when you do that, it means that the dollar is at least a 40% less good store of value than it was a year ago. And that is one of the reasons people opt to Bitcoin,” he stated.

In reference to the United States abandoning the gold standard under President Richard Nixon in 1971, Brooks said:

“The point I really wanna make is the dollar may not actually be backed by anything [...] But cryptocurrencies actually are backed by something. They’re backed by underlying networks, and what you’re buying when you buy a crypto token — whatever it is Bitcoin or anything else — you’re buying a piece of a financial network built to transact all kinds of stuff.” 

Brooks stated that the increasing number of network applications over the past few years is the main reason that the crypto industry is worth almost a $2 trillion today. “I believe in the wisdom of crowds. I think that crowds are telling you that these networks are where finances are going in the future. I wanna be part of that,” he concluded.

U.S. authorities have been actively investigating the concept of a digital dollar. On Monday, Powell said that the Fed would not proceed with the digital dollar without support from Congress.