Janet Yellen, the US Secretary of State, has expressed her criticism once more about the cryptocurrency sector. Yellen, and the Federal Reserve Chair, Jerome Powell, have remained skeptical of the crypto industry despite the high rate at which cryptocurrencies are being adopted in the US.
Janet Yellen concerned about crypto risks
Yellen was speaking at CNBC’s Squawk Box, where she assessed the benefits and risks of the cryptocurrency industry. Yellen commented on the recent announcement by Russia that it would accept Bitcoin for payments noting that crypto had seen tremendous growth and was now playing a significant role in investments.
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The use of Bitcoin as a medium of exchange is yet to be largely adopted. Even the largest Bitcoin bulls believe that Bitcoin (BTC/USD) is more suited as a store of value, giving it the name digital gold. However, the Lightning Network could promote the use of Bitcoin for transactions.
A survey by Visa noted that 25% of small businesses would adopt Bitcoin and other cryptocurrencies this year. The growing use of crypto is creating a need for a comprehensive crypto regulatory framework. Even with the recently signed Executive Order, Yellen remains skeptic about cryptocurrencies.
“There are valid concerns around it. Some have to do with financial stability, consumer/investor protection, use for illicit finance, and other things,” Yellen said. However, she mentioned that cryptocurrencies were an innovation of the financial sector.
Adoption of crypto in the financial sector
There have been growing concerns about the impact that private cryptocurrencies could have on the global financial sector. Last year, China banned private cryptocurrencies, saying that they posed a risk to financial stability.
The major issue with cryptocurrencies is the volatility of prices. The prices of cryptocurrencies tend to fluctuate quickly, creating a debate that the sector could not be suited for adoption in the mainstream financial system for payment purposes.
Last year, El Salvador became the first country to adopt the use of Bitcoin as legal tender. However, the country received much criticism from the World Bank and the International Monetary Fund (IMF). The institutions stated that Bitcoin use could harm the economy.
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Source: https://invezz.com/news/2022/03/26/us-treasury-secretary-still-skeptic-about-cryptocurrencies/