A long-dormant clause in the Federal Reserve’s charter is gaining new attention, and it could have profound implications for the U.S. dollar and the future of digital assets. Dubbed the “third mandate,” this provision could pave the way for unprecedented monetary policies that analysts believe would powerfully accelerate the adoption of cryptocurrencies like Bitcoin.
While the Fed is publicly known for its dual mandate of ensuring maximum employment and stable prices, a third, often-overlooked objective exists in the Federal Reserve Act: moderating long-term interest rates.
This forgotten goal has been thrust into the spotlight by Stephen Miran, a former Trump administration official now nominated for a key role on the Federal Reserve Board. The administration appears to be using this statute as potential legal justification for more aggressive market interventions, including yield curve control (YCC)—a policy where the central bank buys bonds to cap interest rates at a specific target.
What is Yield Curve Control and Why Does It Matter?
As reported by Bloomberg, a financial news leader covering market-moving policy shifts, the tools to achieve this could include expanded quantitative easing (effectively printing money), direct YCC, or manipulating Treasury bill issuance. The immediate goals are clear: reduce the government’s soaring borrowing costs as the national debt balloons past $37.5 trillion and stimulate the housing market by forcing down mortgage rates.
However, the long-term consequence, critics argue, is “financial repression by another name,” as stated by Christian Pusateri, founder of encryption protocol Mind Network. This policy environment artificially suppresses yields, punishing savers and incentivizing risk-taking in search of higher returns.
A Perfect Storm for Bitcoin and Crypto Assets
This macroeconomic shift is seen as overwhelmingly bullish for non-sovereign store-of-value assets. When a central bank actively suppresses interest rates and expands its balance sheet, it traditionally devalues its currency and fuels inflation fears. Investors, in turn, seek hedges against this monetary debasement.
“This is a direct signal that the price of money is coming under tighter control because the age-old balance between capital and labor, between debt and GDP, has become unstable,” Pusateri added. “Bitcoin stands to absorb massive capital as the preferred hedge against the global financial system.”
This sentiment is echoed by prominent figures in finance. Outspoken BitMEX founder Arthur Hayes has suggested that the implementation of yield curve control in the U.S. could be the catalyst that propels Bitcoin to an astonishing $1 million.
The theory finds strong support in recent history. As noted by Reuters, when the Bank of Japan implemented its own yield curve control policy, it created a environment where investors sought alternative assets. Furthermore, educational resources from institutions like the International Monetary Fund (IMF) explain how unconventional monetary policies can lead to capital flows into emerging and alternative markets—a category that now firmly includes cryptocurrency.
In essence, by invoking the “third mandate” to justify controlling the yield curve, the Fed would be explicitly choosing to manage the price of debt over the soundness of the dollar. For crypto advocates, this isn’t a warning; it’s an invitation.
