Yellen Restrains Bitcoin for the Dollar? Experts Say "It's to Protect Investors"

"Yellen Likely Thought Bitcoin Has No Intrinsic Value... Bitcoin's Value Tied to Dollar"
Exchange Issues Mentioned at Hearing... Coinbit Sued for Fraud in November Last Year

[Asia Economy Reporter Gong Byung-sun] ‘Yelsanggi’ is a term recently used in cryptocurrency communities to refer to Janet Yellen, the U.S. Treasury Secretary. It is a portmanteau combining the name of former Minister of Justice Park Sang-gi, who once hinted at shutting down cryptocurrency exchanges causing the market to plummet, and Yellen, who has been criticizing Bitcoin relentlessly. The term is mainly used to mock Yellen’s continuous criticism of Bitcoin.

Yellen’s criticism of cryptocurrencies has become more frequent recently. According to U.S. economic media CNBC on the 22nd (local time), Yellen criticized Bitcoin at the New York Times DealBook Conference, saying, “Bitcoin is for illicit finance.” On the 18th, in an interview with CNBC, she also said, “Bitcoin is a highly speculative asset.”

Some cryptocurrency investors claim that Yellen’s actions are driven by Bitcoin threatening the dollar’s hegemony. However, experts interpret that Yellen’s criticism of Bitcoin is unrelated to the dollar’s dominance. Experts explain that Yellen’s recent stance stems purely from an economic perspective and the fact that cryptocurrency trading fails to protect investors.

Experts say that from a purely economic viewpoint, Bitcoin has no intrinsic value and therefore cannot threaten the dollar’s hegemony. Professor Hong Ki-hoon of the Department of Business Administration at Hongik University said, “It seems that Yellen’s remarks were made from an economist’s perspective because Bitcoin has no intrinsic value, rather than because she felt threatened or had aversion to Bitcoin.” Yellen previously served as a professor at the University of California’s Graduate School of Business.

Lee Byung-wook, CEO of Kras Lab, explained, “Stocks can be judged based on a company’s underlying assets, but cryptocurrencies have no intrinsic value and are greatly influenced by word of mouth.” According to U.S. economic media Bloomberg on the 22nd, when Elon Musk, CEO of Tesla, tweeted on the 20th that “Bitcoin and Ethereum seem a bit high,” the cryptocurrency market began to plunge. Whether Musk’s comment was sincere or mocking remains unclear, yet the market was significantly shaken.

Even if value is assigned, Bitcoin’s scale is too small to challenge the dollar’s hegemony. Professor Hong said, “By simply comparing the size of the U.S. annual budget with Bitcoin’s market capitalization, it is clear that challenging the dollar’s hegemony is impossible.” According to the 2021 fiscal year budget proposal (October 1, 2020 ? September 30, 2021) submitted by former U.S. President Donald Trump in February last year, the U.S. annual budget totaled $4.8 trillion (approximately 5,335.2 trillion KRW). Bitcoin’s market cap surpassed $1 trillion for the first time on the 19th.

There is also an inherent limitation in buying cryptocurrencies with dollars. Lee explained, “Bitcoin’s value is guaranteed by fiat currency, the dollar, and without fiat currency, Bitcoin’s value cannot be maintained.” In fact, the cryptocurrency industry has developed stablecoins pegged to the dollar to overcome volatility and intrinsic value limitations. A representative example is Tether coin, which was recently revealed to have concealed liquidity issues.

Ultimately, experts predict that Yellen’s criticism of Bitcoin is aimed at protecting cryptocurrency investors. On the 18th, Yellen said in an interview with CNBC, “It is important to regulate Bitcoin trading institutions and ensure they comply with regulatory responsibilities.” In reality, trust issues with cryptocurrency exchanges still exist. In November last year, cryptocurrency exchange Coinbit attracted investors by releasing coins through the Pantheon Project but was sued for fraud after failing to carry out promised events and overseas exchange listings.

Lee said, “Cryptocurrency issuers and exchanges should protect investors, but there are still many shortcomings,” and predicted, “To address these issues, U.S. financial authorities will continue cryptocurrency regulations going forward.”

This content was produced with the assistance of AI translation services.