Bitcoin keeps going up in value and setting records, but U.S. Treasury Secretary Janet Yellen is not as high as investors on the leading digital currency.
Yellen on Monday repeated her oft-stated worries about bitcoin, saying it’s a highly speculative, “inefficient” form of digital currency that is often used for illegal transactions.
Since taking over at the Treasury last month, the former chairwoman of the Federal Reserve has made it clear her department will give a hard look at Bitcoin and how it is used as part of an effort to protect investors. She’s hinted that more government regulation is likely.
“People should beware it can be extremely volatile and I do worry about potential losses that investors could suffer,” she said in an interview with the New York Times’ Dealbook. She previously characterized bitcoin as “highly speculative.”
Bitcoin, the most popular digital currency, has soared in the past year and topped a $1 trillion in market value for the very first time. The sharp move up has drawn more interest and investors, including from some large and established companies.
Bitcoin /zigman2/quotes/31322028/realtime BTCUSD +3.46% briefly dropped in value after Yellen’s remarks.
For all its popularity, the digital currency is still not used widely as a payment mechanism between buyers and sellers.
“It’s an extremely inefficient way to conduct transactions,” Yellen said.
The Treasury secretary has also fretted about the ability bitcoin to be used for money laundering and other forms of illegal activities. “I fear it’s often for illicit finance,” she said.
One major study indicated only a small percentage of Bitcoin transactions are used in illicit transactions, however, and supporters also point out the same is true of the dollar. The U.S. has considered eliminating its $100 bill, for instance, because studies suggest it is preferred by criminals.
Despite those worries, Yellen also acknowledged digital currencies are here to stay and that a “digital dollar” might be a good idea. The Fed is already studying the issue.
Much like Venmo or Paypal, a digital dollar and related payment system would provide “faster, safer and cheaper” method of exchanging money, especially for people without bank accounts and the like.
“Too many Americans don’t really have access to easy payment systems,” Yellen said.
Consider the recent federal stimulus checks. The establishment of a digital dollar could have allowed the government to send every American a check directly to their mobile phone or personal account in a blink of an eye.
Instead, some payments took weeks to reach recipients through snail mail or bank deposits. And others who were eligible never got their money at all.