Janet Yellen, Secretary of the U.S. Treasury, completed her Senate confirmation hearing today. She attacked cryptocurrency for its use in crime and advocated for an improved U.S. dollar exchange rate.
Yellen On Bitcoin
During her confirmation hearing, Yellen raised concerns around the use of Bitcoin and cryptocurrency by terrorists and money launderers. Yellen stated that she believes many cryptocurrencies “are used at least in a [transactional] sense mainly for illicit finance.”
She added that regulators need to examine ways to “curtail the use” of those cryptocurrencies and ensure that money laundering does not occur through cryptocurrency channels.
Those comments are not entirely surprising, as Yellen has historically been a vocal critic of Bitcoin. Today’s comments from Yellen will likely provoke further concerns over regulation.
Yellen Softens the Dollar
Yellen also called for a fair dollar rate in the foreign exchange market at the Senate confirmation hearing.
China has long been accused by the international community of weakening its currency to strengthen exports, and a strong U.S. dollar helps China further this alleged manipulation. However, since the U.S. is a net importing country, deliberate weakening of the dollar will hurt its own economy.
Yellen added that the U.S. Treasury will work overtime to release a second relief package following Biden’s $1.9 trillion stimulus round. She says that the absence of aid would worsen the recession caused by response to the COVID-19 pandemic.
Market Responds to Yellen
Yellen’s speech appears to have directly affected the market, which saw a devaluation of the U.S. dollar in favor of inflation hedges such as Bitcoin, gold, and equities.
The U.S. Dollar Currency Index (DXY), which measures the dollar against a basket of six rival currencies, dipped 0.28% on a daily scale. Meanwhile, the Gold and S&P 500 index went up 0.29% and 0.43%, respectively, since today’s market opened, gaining on positive stimulus news and a weak dollar.
Disclosure: The author of this article held Bitcoin at the time of publication.