Janet Yellen Torches Bitcoin Again, Calls it ‘Extremely Inefficient’ As A Payment Option
U.S. Treasury Secretary is rooting for a digital dollar, but remains unconvinced about Bitcoin, which she describes as an inefficient asset.
U.S. Treasury Secretary Janet Yellen is not backing down with her criticism of Bitcoin. Yellen has gone on to describe the leading cryptocurrency as an “extremely inefficient” and “highly speculative asset.”
Bitcoin is Dangerous
Yellen commented at the New York Times’ “DealBook” conference, where she spoke on the country’s road to recovery post-covid-19.
Yellen had previously served as Federal Reserve chair under the Obama administration, having been appointed to replace Ben Bernanke from 2014 to 2018. She makes history as the first woman to be appointed as Treasury Secretary.
Her comments come as Bitcoin witnessed a sharp decline in prices, shedding off around $11,000 to $47K on Bitstamp. Bitcoin bounced back some moments later, regaining support and climbing back up to $51,500.
For Yellen, Bitcoin’s issues trump its benefits. While she acknowledges the role cryptocurrencies play in the financial system by creating quicker payment methods, she believes they have numerous problems. She raised concerns around its legitimacy and stability as an asset, bashing Bitcoin for its illicit financing links.
“People should beware it can be extremely volatile, and I do worry about potential losses that investors could suffer…I fear it’s often for illicit finance. It’s an extremely inefficient way to conduct transactions.”
Yellen also hinted at the possibility of the Federal Reserve hopping on the central bank digital currency (CBDC) bandwagon. While countries like China and Russia are making headway with their CBDCs, the U.S. has remained indecisive and is still unsure of what it plans to do.
Crypto’s Criminal Links
For Treasury Secretary Yellen, there’s one awful smell that hangs around cryptocurrencies—criminality. The crypto market should have gotten used to Yellen’s negative crypto comments by now. It has become a recurring theme with the high-ranking official. Earlier this month, she raised the alarm on how bitcoin was being abused for illicit purposes at a financial sector innovation roundtable. Yellen explained at the event,
“I see the promise of these new technologies, but I also see the reality: cryptocurrencies have been used to launder the profits of online drug traffickers; they’ve been a tool to finance terrorism.”
While cryptos like Bitcoin and Ether are attractive to criminals due to their pseudonymous nature, recent studies from researchers show the tides are changing. Research from famed blockchain analysis firm Chainalysis revealed a decline in crypto-related crimes in 2020. The share of criminal activity was roughly $21.4 billion in 2019 of all crypto transaction volume, according to Chainalysis. That figure fell to 0.34$ or $10 billion in total transaction volume. Chainalysis believes the identification of criminal wallet addresses was a major catalyst for the drop in numbers.