- Janet Yellen, Joe Biden’s pick for Federal Reserve chair, admitted in 2018 that she was “not a fan of Bitcoin”
- Yellen criticized Bitcoin’s transaction speed, links to illegal usage, and use of energy
- Her knowledge of the system could be a blessing in future
Janet Yellen, Joe Biden’s pick for Federal Reserve chair, admitted in 2018 that she was “not a fan of Bitcoin”, although she does seem to have more knowledge of the cryptocurrency than other politicians. Yellen, who held the role between 2014 and 2018 before being replaced by Jerome Powell, criticized Bitcoin’s links to illicit activities, payment processing speed, and energy usage, although her knowledge of these factors suggests that she is, at least, more educated on the subject than her predecessors.
Yellen Perpetuated Existing Bitcoin Stereotypes
Yellen was being interviewed at CFA Montreal in October 2018, a year after her departure from her position as Fed chair, when she was asked about Bitcoin:
I will just say outright – I am not a fan (of Bitcoin). Many of those (transactions) that do take place in Bitcoin are illegal, illicit transactions. I worry about the implications of the use of cryptocurrencies for terrorist financing, money laundering and the like.
In the two years since these comments, regulation of the cryptocurrency space has increased tremendously, making illegal use of Bitcoin harder than ever. This regulatory clampdown has had the desired effect, as has been evidenced in a number of reports issued in the past couple of years that prove that illegal use of Bitcoin is dropping.
“Very Slow in Handling Payments”
Yellen also criticized Bitcoin’s volatility, saying it prevented it from being a useful currency, and that there were other drawbacks when it came to payment handling:
It’s also not an efficient means for processing payments. It’s very slow in handling payments, it has difficulties because of its very decentralized nature…
Sadly for Bitcoin supporters these accusations are harder to argue against, which could explain why Bitcoin has shifted from being seen as a currency alternative to a store of value by institutional investors and the like.
Criticism Has a Silver Lining
While Yellen’s negative opinion of Bitcoin, which may have changed in the intervening years, is not necessarily a good thing, the fact that she knew about its decentralized nature and its slow processing times shows a surprising depth of knowledge of the subject.
Yellen could have done what many in her position have done time and again since 2008 and dismiss Bitcoin as a scam or a Ponzi scheme, but instead she has clearly taken the time to educate herself on the subject, which could bode well for the next four years.
