Treasury Secretary Yellen Comments Boost Crypto Prices

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After struggling to break $40,000 for several days, Bitcoin (BTC) finally jumped to over $42,000 overnight, according to CoinMarketCap data. Other crypto prices followed follows. The much-needed boost came from an unexpected and unintended source: a statement accidentally posted by Treasury Secretary Janet Yellen.

The statement was subsequently taken down, but not before the media and crypto world had noted the mostly positive tone and reacted accordingly. The Treasury re-released Yellen’s words this morning.

What did Janet Yellen say to boost crypto?

In the past, Yellen has been lukewarm at best on crypto. She’s warned that it is a speculative asset and raised concerns about its efficiency and use for illicit activities. Her most recent comments do talk about the need to address certain risks, but they also acknowledge the potential benefits of supporting this evolving industry.

“This approach will support responsible innovation that could result in substantial benefits for the nation, consumers, and businesses,” Yellen said in the statement, referring to President Biden’s March 9 executive order calling for an examination of the risks and benefits of cryptocurrency. “It will also address risks related to illicit finance, protecting consumers and investors, and preventing threats to the financial system and broader economy.”

One of the challenges in regulating crypto is that it falls under the remit of several organizations, including the Securities and Exchange Commission and the Commodity Futures Trading Commission. Yellen says the Treasury will partner with all the agencies involved to produce a report on the future of money and payment systems.

The Treasury will also convene the Financial Stability Oversight Council, with a view to evaluating risks and assessing whether the right safeguards are in place. Yellen says the plan is to consult investor protection groups and market participants.

The initial response to Yellen’s statement was positive. Gemini’s Cameron Winklevoss tweeted, “I applaud this constructive approach to thoughtful crypto regulation and look forward to working together with the various stakeholders to ensure that the US remains a leader in crypto.”

What this means for investors

Crypto had a rocky start to 2022, as economic tightening from the Federal Reserve caused investors to move away from riskier assets. Russia’s invasion of Ukraine and fears about heavy cryptocurrency regulation have only added to crypto’s woes.

However, Yellen’s comments and Biden’s executive order could address some of that uncertainty, though it’s too early to be sure. The executive order gives various organizations 180 days to make policy recommendations and evaluations. The proof is often in the pudding, and a lot will depend on the content of those policy documents.

READ MORE: Top cryptocurrency apps and exchanges

Clear US crypto regulation could help the industry flourish in the long term. In the short term, today’s announcements are a welcome boost, but the wider economic and geopolitical environment mean we can still expect more volatility.

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Emma Newbery owns Bitcoin. The Motley Fool owns shares of and recommends Bitcoin.

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