Joe Biden would like former president of the Fed Janet Yellen, who is critical of Bitcoin, to lead the US Treasury. This position corresponds to that of a Minister of the Economy.
She would be the first woman in history to hold this position.
Ever since this rumour was reported in the Wall Street Journal, the cryptocurrency industry has gone back in time, recalling her policies for or against Bitcoin when she was at the helm of the Fed.
Who is Janet Yellen and what is her vision of Bitcoin?
Janet Yellen led the Federal Reserve from 2014 to 2018. She was, also in that case, the first woman to lead the central bank of the United States. She made a name for herself as Vice-President of Ben Bernanke for her expansive policies, particularly in the wake of the 2008 crisis. She was one of those who wanted to stimulate the economy with interest rates close to zero and a massive purchase of government bonds.
It was therefore under her chairmanship that Bitcoin began to be overwhelmingly discussed, coinciding with some key episodes such as the speculative bubble between 2017 and 2018.
In this regard, it is worth mentioning some of her famous statements.
“Bitcoin is a payment innovation that’s taking place outside the banking industry. To the best of my knowledge there’s no intersection at all, in any way, between Bitcoin and banks that the Federal Reserve has the ability to supervise and regulate. So the Fed doesn’t have authority to supervise or regulate Bitcoin in anyway”.
These were also the days following the arrest of Charlie Shrem (at the time CEO of BitInstant) and Robert Faiella (implicated in Silk Road), both accused of money laundering. Precisely on the risk that BTC was used to launder money, Yellen said:
“The Fed doesn’t have authority with respect to Bitcoin,” said Yellen. “But certainly it would be appropriate for Congress to ask questions about what the right legal structure would be for digital currencies.
It’s not so easy to regulate Bitcoin because there’s no central issuer or network operator. This is a decentralized, global [entity]… We’re looking at this”.
In 2017 her assessment of Bitcoin was even worse, calling it “highly speculative“:
“Bitcoin at this time plays a very small role in the payment system. It is not a stable source of value and it does not constitute legal tender. It is a highly speculative asset”.
However, she reiterated that the Fed could do nothing for Bitcoin:
“The Fed doesn’t really play any regulatory role with respect to bitcoin, other than assuring that banking organizations that we do supervise are attentive, that they are appropriately managing any interactions they have with participants in that market, and appropriately monitoring anti-money laundering, bank secrecy act responsibilities that they have”.
One of her last public statements about Bitcoin and cryptocurrencies came in October 2018, when she was no longer leading the Fed. At that time she said she was not a fan of Bitcoin:
“I will just say outright I am not a fan, and let me tell you why,” Yellen said. “I know there are hundreds of cryptocurrencies and maybe something is coming down the line that is more appealing but I think first of all, very few transactions are actually handled by bitcoin, and many of those do take place on bitcoin are illegal, illicit transactions”.
“It is one … thought that for something to be a useful currency, it needs to be a stable source of value, and bitcoin is anything but. So it’s not used for a lot of transactions, it’s not a stable source of value and it’s also not an efficient means for processing payments. It’s very slow in handling payments”.
Illegal, unstable and practically useless, a more negative view was hard to imagine.
Who knows whether Janet Yellen has changed her mind in recent years, and especially now that Bitcoin is moving towards new historical highs. Certainly, times have changed: today Bitcoin is also used as a payment system, it has become an attractive product for banks, and initiatives and products for institutional investors have multiplied.
In any case, the appointment of Janet Yellen as the head of the US Treasury will be effective only when Joe Biden takes office as US President (January 2021) and will then have to be confirmed by the Senate.
A curiosity about Janet Yellen and her relationship with BTC worth mentioning: in 2017 during a hearing in the US Senate Finance Committee, while she was speaking, someone put up a sign with an unmistakable writing: “Buy Bitcoin”.