The agency writes that an ever-expanding supply of altcoin would keep the price of bitcoin "depressed relative to where it would have otherwise been."
The Federal Reserve also draws the parallel between the exchange rate of altcoins and bitcoin as between two intrinsically worthless objects.
"According to economic theory, any exchange rate is possible—including an exchange rate that does not vary with the relative supplies of Hamilton and Lincoln bills. The intuition for this result is that Hamilton and Lincoln bills are intrinsically worthless bits of paper. There are no fundamental economic factors determining the exchange rate between two intrinsically worthless objects. Something similar holds true for Bitcoin and Altcoin," the publication states.
Earlier, former U.S. Federal Reserve Chair Janet Yellen said that cryptocurrencies like bitcoin "are not considered legitimate currency, owing to their lack of ability to store value, and limited scope in everyday transactions."