Janet Yellen’s Reign as US Treasury Secretary: Her Impact on Crypto

Janet Yellen – an American economist who currently serves as the 78th US Treasury Secretary – has shown her anti-crypto position several times. During her 20-month reign, she has argued that bitcoin is unsuitable for carrying out financial transactions and that people should not rely on investing in digital assets as part of their retirement strategy.

Some recent reports suggested that Yellen could leave her position after the mid-terms in early November. It is still unknown whether her successor will be more open to the digital asset sector or will continue to have a similar negative policy.

Cryptonegativism in recent years

Janet Yellen has extensive experience as an American civil servant. In 1994, former President Bill Clinton nominated her as a member of the Federal Reserve Board of Governors. Three years later, she resigned to join the Council of Economic Advisers (CEA) as its chair.

In 2004, Yellen was appointed president of the Federal Reserve in San Francisco, becoming the first woman in American history to hold that position. In 2010, she returned to the Fed as deputy chair of the Federal Reserve Board of Governors, and later became chair of the central bank.

During Donald Trump’s presidency, Yellen stayed away from politics. Between 2017 and 2021, she mainly lectured across the United States and abroad, strongly criticizing the billionaire’s administration.

However, Joe Biden’s election as President of the United States changed the tide, and Yellen returned to the White House as Treasury Secretary.

Over the decades, she has not been that vocal about the cryptocurrency sector except for the last two years. Shortly after getting his latest position, the economist claimed that bitcoin is a highly speculative and inefficient asset that criminals often use in their illegal operations.

A few months later, Yellen gave her first speech dedicated solely to cryptocurrencies. She maintained her position that such coins are a threat to the financial system and that regulators should apply comprehensive rules to the industry.

Unlike bitcoin and the alternative coins, the finance minister claimed that a potential launch of a digital dollar could be beneficial for the country and its national currency.

Remove crypto from retirement plans

Yellen’s negative tone on digital currencies peaked this summer when she warned people that adding crypto to their retirement plans is not an appropriate step:

“It’s not something I would recommend to most people saving for retirement. For me, it is a very risky investment.”

Yet Yellen has also shown brief signs of acceptance by the cryptocurrency industry. Days before her nomination as US Treasury Secretary, she stated that digital assets have advantages that governments need to explore. The economist even added that blockchain technology has the potential to “improve the efficiency of the financial system.”

Her influence on Crypto’s development

Following the reports that Yellen may step down from her position, it is worth considering how such changes will affect the cryptocurrency industry.

The U.S. Treasury Secretary has direct influence on the president since she serves as the principal adviser on economic matters. In addition, Yellen oversees the Department of the Economy and Treasury, which means that all fiscal, fiscal, printing and other monetary policies must be approved by her before being published.

Her negative view of crypto may be one of the reasons why the US government has been quite reserved in the sector. It remains to be seen how her successor (although there is one anytime soon) will approach the industry.

Given the importance of the position, it would be safe to assume that the cryptocurrency industry will be impacted in some way if Yellen continues to serve in that role or if there is a successor in place. As still the world’s largest economy and among the leaders in terms of crypto adoption, the US is arguably the most important country for the industry.

We have seen how the actions of the SEC (in the case against Ripple or the refusal to approve a spot Bitcoin ETF), as well as the monetary policy of the Fed, have affected it. The Biden administration has also already put the industry under its purview with executive orders and potential regulatory plans.

As such, having a finance minister with a more open approach to crypto can be very beneficial, and unfortunately vice versa.

Featured image courtesy of the BBC