FX.co ★ BTC plunges on Yellen’s warning

US Treasury Secretary Janet Yellen has sounded an alarm over the danger of bitcoin use in illicit activities. As a result, the top cryptocurrency plunged by over 13%.

Yellen’s harsh criticism of digital cash, primarily bitcoin, did not go unnoticed and the crypto market suffered a sharp drop. Other tokens followed suit. Thus, Ethereum fell by 19%, Litecoin was down by 18%, XRP sagged by 17%, and Dogecoin lost 14%.

"I don’t think that bitcoin … is widely used as a transaction mechanism. To the extent it is used I fear it’s often for illicit finance. It’s an extremely inefficient way of conducting transactions, and the amount of energy that’s consumed in processing those transactions is staggering," the Treasury Secretary stated.

In addition to risks related to money laundering and terrorist financing, bitcoin mining, as well as operations of the entire network, requires an unreasonably large amount of electricity. In the process of mining, high-power computers leave an annual carbon footprint equal to the electric consumption of countries such as New Zealand, experts at Digiconomist say.

Janet Yellen proposed to create an alternate virtual coin - Fed’s digital US dollar. "I think it could result in faster, safer and cheaper payments, which I think are important goals," she said.