New U.S. Treasury Secretary Janet Yellen Made A Serious Bitcoin Warning

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U.S. President-elect Joe Biden has confirmed reports he will nominate renowned labor economist Janet Yellen as his Treasury Secretary.

With bitcoin back to the forefront of global consciousness thanks to a return to its all-time high price, increased regulatory scrutiny could be just around the corner.

Yellen, who served as the chair of the U.S. Federal Reserve until 2018 and helped steer the Fed through the aftermath of the 2008 global financial crisis, has previously said she’s “not a fan” of bitcoin, warning “it is not a stable store of value.”

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“[Bitcoin] is not a stable store of value and it doesn’t constitute legal tender,” Yellen told reporters at a press conference at the height of bitcoin’s massive 2017 bull run. “It is a highly speculative asset.”

The bitcoin price soared from under $1,000 per bitcoin to around $20,000 through 2017 only to crash back to $3,000 in 2018. Now, the bitcoin price has returned to those 2017 highs after more than doubling in price this year, fuelled by massive government stimulus in the wake of the coronavirus pandemic and a growing sense that bitcoin could somewhat displace gold as a safe-haven asset.

However, the bitcoin market was last week spooked by unconfirmed rumours outgoing U.S. Treasury Secretary Steven Mnuchin could use his last few weeks in office to force through a crackdown on bitcoin and cryptocurrency services.

These fears, amplified by the chief executive of bitcoin and cryptocurrency exchange Coinbase, Brian Armstrong, sent the bitcoin price sharply lower—wiping $50 billion from the combined value of the world’s cryptocurrencies.

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In 2018, Yellen also warned that “many” bitcoin transactions are “illegal, illicit transactions”—an opinion echoed by a recent U.S. Department of Justice (DOJ) report that found the emergence of bitcoin and similar cryptocurrencies is a growing threat to U.S. national security, with the attorney general William Barr’s Cyber-Digital Task Force calling it the “first raindrops of an oncoming storm.”

However, last month payments giant PayPal
PYPL
announced it planned to add bitcoin buying and spending services—with PayPal’s near 350 million users likely to help dispel bitcoin’s reputation as an enabler of illicit transactions.

With bitcoin and cryptocurrencies receiving significant validation this year, some have called for bitcoin acceptance and even adoption from the incoming Biden administration.

“Joe Biden’s nascent administration should recognize the benefits of integrating bitcoin into the U.S. financial system,” Niall Ferguson, the Milbank family senior fellow at the Hoover Institution at Stanford University, wrote in a Bloomberg column this week.

Given Yellen’s previous comments and bitcoin’s continued volatility, an integration of bitcoin into the U.S. financial system probably shouldn’t be expected any time soon.



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