Bitcoin continues to increase value and set records, but U.S. Treasury Secretary Janet Yellen is not as high as investors in the leading digital currency.
Yellen on Monday reiterated her concern about bitcoin, saying it is a very speculative, ‘inefficient’ form of digital currency that is often used for illegal transactions.
Read: The US economy is showing some sparkle again, but the dark days are far from over
Since taking over from the Treasury last month, the former chair of the Federal Reserve has made it clear that her department will investigate bitcoin well and how it will be used as part of an effort to protect investors. She has indicated that more government regulation is likely.
“People need to be careful that it can be extremely volatile and I’m worried about potential losses that investors could suffer,” she said in an interview with the New York Times’ Dealbook. She has previously described bitcoin as ‘highly speculative’.
Bitcoin, the most popular digital currency, has soared in recent years, reaching a trillion dollars in market value for the very first time. The sharp increase has attracted more interest and investors, also from large and established companies.
Bitcoin BTCUSD,
briefly declined in value after Yellen’s remarks.
See also: Will bitcoin send $ 100,000 in 2021, or is the price ‘unsustainable’?
Despite all its popularity, the digital currency is still not widely used as a payment mechanism between buyers and sellers.
“This is an extremely inefficient way of conducting transactions,” Yellen said.
The treasury secretary was also frustrated about the ability to use bitcoin for money laundering and other forms of illegal activity. “I fear it is often for illegal financing,” she said.
One large study indicated that only a small percentage of Bitcoin transactions are used in illegal transactions, and supporters also point out that the same goes for the dollar. The US has considered eliminating its $ 100 bill, for example, because studies suggest it is preferred by criminals.
Despite these concerns, 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.
Like Venmo or Paypal, a digital dollar and related payment system would provide a faster, safer and cheaper method of exchanging money, especially for people without bank accounts and the like.
“Too many Americans do not really have access to easy payment systems,” Yellen said.
Think of the recent federal stimulus surveys. The introduction of a digital dollar would have enabled the government to send every American a check directly to their cell phone or personal account in the blink of an eye.
Instead, it took several weeks to reach recipients via snail mail or bank deposits. And others who are eligible never got their money.