Remarks from Treasury Secretary Janet Yellen about cryptocurrency at the New York Times DealBook conference sent red-hot Bitcoin tumbling early Monday before recovering later in that day.
Saying she fears it’s mostly used for illicit finance, Yellen also told CNBC’s Andrew Ross Sorkin that it’s “an extremely inefficient way of conducting transactions, and the amount of energy that’s consumed in processing those transactions is staggering.”
Her remarks were part of a one-two punch to the suddenly popular cryptocurrency, with Elon Musk noting Saturday that bitcoin prices “seem high.” Musk, the world’s richest man, announced earlier in February that Tesla added $1.5 billion in Bitcoin to its balance sheet, sending it soaring as other institutional investors entered the space.
Total market value now tops $1 trillion, trading at over $54,000 late Monday. Skybridge Capital Managing Director Anthony Scaramucci, who launched a Bitcoin-focused fund in January, said he believes it will reach $100,000 in value by year’s end.
Yellen specifically took issue with the electronic resources Bitcoin trading requires, and the carbon footprint it therefore leaves behind.
‘Highly speculative’
Aside from resource and fraud concerns, Yellen, previously Chair of the Federal Reserve, also took issue with the asset class’s volatility.
“It is a highly speculative asset, and you know I think people should be aware it can be extremely volatile, and I do worry about potential losses that investors can suffer,” Yellen told Sorkin.
Her comments are at odds with what many believe will be much more crypto-currency-friendly regulatory policies from fellow regulator Gary Gensler, tapped to head the Securities and Exchange Commission (SEC).
While known as a tough, non-nonsense regulator at U.S. Commodity Futures Trading Commission who also had a hand in accounting reform with the Sarbanes-Oxley Act, Gensler conducts research and teaches on blockchain technology, digital currencies, financial technology.