When asked if cryptocurrencies like Bitcoin need a special regulatory environment, Yellen said that the authorities are focusing on protecting investors and ensuring that cryptocurrencies are not used in criminal activity.
“I think it’s important to make sure that it is not used as a vehicle for illicit transactions and that there’s investor protection,” said Yellen.
In recent weeks, markets went on a wild run after online traders used Reddit and other social media channels to pump stocks that had previously been shorted by traders on Wall Street. The activity around GameStop and several other companies brought a brand new experience to the world of trading and even caused the US top regulators to convene to discuss the matter.
Speaking about this recent meeting with the Securities and Exchange Commission (SEC), the Federal Reserve, the New York Fed and the Commodity Futures Trading Commission, Yellen said that the “broad conclusion was that markets worked reasonably well.”
However, she conceded that regulators “really need to look at whether the trading practices are consistent with investor protection and fair and efficient market.”
Last month, in an obvious response to those events, the SEC released a letter addressing the “volatility of certain stocks.” In that statement, the Commission vowed “to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws.”
Yellen meanwhile went on to speak more about cryptocurrencies, adding that for the bodies overseeing the digital assets space, it is “certainly important” to make sure that they follow their regulatory responsibilities.
The US Treasury Secretary has been a vocal critic of Bitcoin in the past, and during her Senate confirmation hearing in January she stated that cryptocurrencies were of “particular concern” when it comes to facilitating criminal activity and sponsoring terrorism. Later on, Yellen, however, recognized their “potential” to improve the financial system.