Yellen Calls For Crypto Regulation, ECB Says Bitcoin Shouldn’t Be Legitimised

US Treasury Secretary, Janet Yellen calls for crypto regulation, Fed Chair Jerome Powell lifts cryptocurrencies and riskier assets with speech, and the ECB pushes back against legitimising Bitcoin.

Yellen Calls for Crypto Regulation

Former Fed Chair and current US Treasury Secretary Janet Yellen stated Wednesday that although the recent chaos in the cryptocurrency market has not directly impacted the wider banking sector, she did see the need for regulation of the decentralised finance space. At an event hosted by the New York Times DealBook, she said it was important to guarantee that crypto assets had suitable protections for customers.She stated, “I have been sceptical, and I remain quite sceptical,” adding “I think everything we’ve lived through over the last couple of weeks, but earlier as well, says this is an industry that really needs to have adequate regulation. And it doesn’t“

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Powell Lifts Risk Assets

Federal Reserve Chairman Jerome Powell spoke on Wednesday at the Hutchins Center on Fiscal and Monetary Policy, Brookings Institution, Washington, D.C., in a speech titled Inflation and the Labor Market. As had previously been flagged to markets by multiple Fed speakers, including by Powell in comments after the November Federal Reserve meeting, he signalled that smaller interest rate increases are likely ahead and could start in December.

He stated” “Thus, it makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down,” adding, “the time for moderating the pace of rate increases may come as soon as the December meeting.”

However, he went on to caution that monetary policy is expected to stay restrictive for some time until signs of real progress appear on inflation. “Despite some promising developments, we have a long way to go in restoring price stability,” going on to say, “we will stay the course until the job is done.”

This speech caused risky assets to leap higher, with US equity indices posting strong gains and cryptocurrency markets broadly rallying.

ECB: Bitcoin shouldn’t be legitimised

In a blog post on Wednesday, European Central Bank (ECB) said that Bitcoin is being artificially “propped up” and should not be legitimised by regulators as it is more like gambling. Authors of the post, Ulrich Bindseil and Juergen Schaaf stated, “Big bitcoin investors have the strongest incentives to keep the euphoria going,” going on to add, “since Bitcoin appears to be neither suitable as a payment system nor as a form of investment, it should be treated as neither in regulatory terms and thus should not be legitimised.“