Are cryptocurrencies like bitcoin about to surge into the mainstream, as so many proponents are hoping?

One sign they might be was provided on Monday by Federal Reserve chairman Jerome Powell. During a panel on cryptocurrencies and international payments sponsored by the International Monetary Fund, Powell said that the Fed is researching the viability of creating and maintaining its own central bank digital currency (CBDC).

Physical "Bitcoins" scattered over a smartphone, with a computer monitor in the background.

Image source: Getty Images.

His words were measured, yet they indicate that the consideration is serious. "We think it's important that any potential CBDC would serve as a complement to, and not a replacement for, cash and current private-sector digital forms of the dollar such as commercial bank money," he said.

Powell enumerated several concerns that he and his colleagues must take into account, not least the potential CBDC's effect on monetary policy and supply, and how it would impact financial stability. Security and privacy are also important considerations.

Some cryptocurrency bulls have advocated for a overarching and accessible global cryptocurrency. Facebook (NASDAQ:FB) had ambitions in this sphere, announcing in 2019 that it was creating such a product, Libra. But lawmakers and critics soon pounced on the idea of Facebook potentially acting as a sort of unregulated, digital-age central bank on its own, and potential partners started to abandon the project.

Powell's pronouncements, while optimistic, appeared to be short on detail. So at this early stage it's hard to gauge how the Fed's moves in this arena will impact Facebook's project, in addition to cryptocurrency businesses such as Grayscale Bitcoin Trust (OTC:GBTC).

Judging by investor reaction to Powell's words, a company like Grayscale might benefit from the creation of a Fed cryptocurrency. In contrast to the broader market's Monday slump, Grayscale's stock rose by 3.2%.