Bitcoin is a “Highly Speculative Asset”: Fed Chair Yellen

Mid-week, the Tether minted wallet produced two tranches of 25 million coins, which are still unsent, but may hit the markets in the next few days.

Federal Reserve Chair Janet Yellen turned a skeptical eye on Bitcoin’s recent boom, downplaying the cryptocurrency’s value and influence at her last press conference as head of the central bank. 

Yellen, whose term ends in February, was speaking at a press conference following a meeting wherein the Federal Reserve raised its benchmark interest rate by 25 basis points, to a range between 1.25% and 1.50%.

When questioned about Bitcoin, Yellen said:

“Bitcoin, at this time, plays a very small role in the payments system. It is not a stable store of value and it doesn’t constitute legal tender. It is a highly speculative asset.”

Bitcoin has had a monumental year – the cryptocurrency has increased more than 17 times in value since the start of 2017, and has grown massively in popularity, gradually finding its way into the mainstream. It has also attracted the attention of Wall Street, and Bitcoin futures products have been announced by reputable exchanges CBOE (launched on December 10) and CME (due to launch on December 18).

However, Bitcoin’s massive and completely unprecedented bull run has also prompted many to express fears of a bubble, while central banks and regulatory authorities have issued warnings to investors, urging them to exercise caution and prudence when putting money into digital currencies.

Earlier this month, Philip Lowe, Governor of the Reserve Bank of Australia, called Bitcoin a “speculative mania”. Securities regulator and president of the North American Securities Administrators Association Joseph Borg has also claimed that Bitcoin is in its “mania” phase and a “levelling off” is likely not far off. 

In response to a question about the possibility of the Fed’s own digital currency, Yellen acknowledged that there had been discussions on the topic, but confirmed that it was not under serious consideration at present.

“There might be a central banker or two that might go in that direction. But I really want to caution that this is not something that the Federal Reserve is seriously considering at this stage.”

“I doubt that the Federal Reserve will go into that direction, but it is something that central banks are looking at to see if there could be benefits,” she added.

China, Russia, and Singapore (among others) have been reported to be working on developing central bank-issued digital currencies; in addition, China and Russia have adopted a strict regulatory approach toward Bitcoin and its peers, endeavoring to bring the burgeoning crypto market under government control. However, the Fed has maintained its distance when it comes to digital currencies (Yellen told reporters that the Fed had no role to play in regulating Bitcoin), while focusing on blockchain technology and research instead.