What You Need to Know
- The treasury secretary worries about the inefficiency of Bitcoin and protecting investors from losses due to its volatility.
- Regulating institutions that deal in Bitcoin is important, Yellen says.
- But she says a blockchain-based digital dollar from the Fed could yield “faster, safer and cheaper payments.”
Treasury Secretary Janet Yellen has many concerns about Bitcoin.
In an appearance at an online conference Monday morning, Yellen repeated her concerns about Bitcoin’s “highly speculative” nature and use in “illicit” activities and added another: its inefficiency.
“Bitcoin is an extremely inefficient way of conducting transactions, and the amount of energy that’s consumed in processing those transactions is staggering,” Yellen told host Andrew Ross Sorkin, the founder and editor of DealBook at The New York Times, which sponsored the conference.
Asked about potential regulation of Bitcoin, Yellen said “it’s important” to ensure that the cryptocurrency “is not used as a vehicle for illicit transactions” and that there’s protection for investors. “Regulating institutions that deal in Bitcoin, making sure that they adhere to their regulatory responsibilities … is certainly important,” Yellen said.
She noted her “worry about potential losses that investors can suffer” because of the volatility of Bitcoin.
Yellen’s testimony added to the volatility in Bitcoin in morning trading. Bitcoin prices lost several thousand dollars, dipping below $50,000 before recovering to nearly $52,000 by early afternoon.
Bitcoin was also under pressure from comments that Elon Musk tweeted Saturday, saying that Bitcoin’s prices “seem high.”