Janet Yellen attacked cryptocurrencies, and soon after the price of Bitcoin dropped again. The events took place during a hearing of the future US Secretary of Treasure before the Senate Finance Committee.
In her speech, Janet Yellen attacked cryptocurrencies which she said are being used for illicit purposes. She said specifically:
“I think many (cryptocurrencies) are used, at least in a transaction sense, mainly for illicit financing. And I think we really need to examine ways in which we can curtail their use, and make sure that anti-money laundering (sic) doesn’t occur through those channels.”
In particular, Janet Yellen expressed concern about the risk that cryptocurrencies could finance terrorism as well as other criminal activities.
Her stance is not surprising. Janet Yellen has always been very critical of Bitcoin and cryptocurrencies. Back in October 2018, she expressed a very similar thought.
She also expressed doubts about the stability of Bitcoin’s value, but this is perhaps the part of her thinking that may even be negligible.
But to say that cryptocurrencies are almost always used for illegal purposes is completely wrong. On the contrary, a recent survey by Chainalysis shows that only 0.4 of transactions in 2020 were used for criminal purposes.
It is true that this is equivalent to $10 billion, a figure that should not be overlooked, but it is also true that this value is even lower in comparison to 2019. The previous year they amounted to almost $22 billion, so a year later they have more than halved.
And then it should be pointed out that using cryptocurrencies like Bitcoin does not shelter criminals, because Bitcoin itself is highly traceable. Just remember the case of the Twitter hackers, who were identified after moving ‘stolen’ funds to Coinbase, which recognised and reported them.
Bitcoin is probably still paying for the first years of its existence, and the SIlk Road case, when it was used in Ross Ulbricht’s marketplace to buy any kind of illegal goods, starting with drugs and weapons.
Today, the picture has changed a lot: Bitcoin and many cryptocurrencies have become stores of value or investment products and those who use them are by no means criminals. Finally, more and more businesses are starting to accept them as a method of payment. There certainly remains a minority who are bending their use to banned activities, but this does not justify such a clear-cut stance as Janet Yellen’s.
Bitcoin down after Janet Yellen’s statements
However, when a US Treasury Secretary speaks out on cryptocurrencies, it is inevitable that the market will be affected. The whole sector, with few exceptions, is negative today. Bitcoin is retracing, posting a loss of 6.5% and a value of around $34,300. Ethereum is also down, after hitting its ATH, leaving 7% on the ground.
However, these are predictable retracements after such vertical rises. What is certain is that Janet Yellen’s words hint at the arrival of stricter regulation, and this may frighten investors.