Janet Yellen says the FTX crash shows cryptocurrencies are “risky … even dangerous” investments.

Treasury Secretary Janet Yellen told CBS News that the spectacular collapse of the cryptocurrency exchange FTXwhich launched a shockwave in the cryptocurrency world last week with its filing for bankruptcy, should serve as a warning to Americans to invest their money in “extremely risky” financial products traded in an unsupervised space. and adequate regulation “.

FTX, one of the largest cryptocurrency exchanges in the world, collapsed within a single week and both the company and its former CEO, Sam Bankman-Fried, are now being investigated in the US and other nations for possible breaches. of the titles. Although the fallout from the FTX crash has largely been limited to the cryptocurrency financial markets, Yellen has joined a growing chorus of experts and officials around the world by suggesting that the digital currency industry should face more regulation.

“I think this is a space where investors and consumers should really be very careful,” Yellen told CBS News correspondent Nancy Cordes in an extensive interview in Bali, where the Secretary of the Treasury was attending the G20 summit together. to President Biden. She

“We have very strong investor and consumer protection laws for most of our financial markets, but somehow the crypto space is inadequately regulated.”

US Treasury Secretary Janet Yellen, left, speaks to CBS News Congressional Correspondent Nancy Cordes in Bali, Indonesia on November 15, 2022, on the sidelines of the G20 Summit.

CBS News

Yellen said the Biden administration highlighted “regulatory gaps that need to be filled in order for this to be a space for Americans to feel safe doing business” and blamed “lack of proper supervision and regulation” for the collapse. of the FTX.

Yellen stressed that she was unable to offer Americans specific advice on how they should or should not invest their money, but called cryptocurrencies “extremely risky and even dangerous assets in some way” and urged people to “do. extreme attention to their activities in this space “.

FTX creditors will be first in line to receive any assets a bankruptcy judge sees fit to distribute as the company seeks to restructure as part of the Chapter 11 filing. Investors in the Bahamas-based company, which had raised approximately $ 2 billion. dollars in venture capital will be second in line. This means that FTX account holders, who have used the platform to trade bitcoin, solana, and other digital currencies, may need to. wait years to get their money back if they ever do.

A “strong and resilient economy” with respect to inflation

The Treasury chief described the US economy as a whole as strong and resilient and said he expects inflation to drop over the next year with many jobs offered to Americans, but warned that the global picture remained “uncertain” .

“Many countries are really suffering from high energy and food prices, and we ourselves have these tensions, but we have a strong and resilient economy,” Yellen told Cordes, calling the US labor market “exceptionally strong. “.

Inflation showed signs of slowing in October


“We continue to create jobs at a very solid pace. Unemployment at its lowest in nearly 50 years and two job opportunities for every American looking for work,” he said, defining the economic situation for households, banks and businesses. of the country “little by little and big solid.”

“I expect inflation to go down over time, and Americans are rightly concerned about that, but I think they will feel better,” he said.

Diesel “shortage and low stocks”

One thing that could work against the US inflationary rebound this winter is a limited supply of diesel fuel, which is used both to heat buildings and to move virtually everything Americans buy into the country. Diesel powers most freight trains and trucks, and the global fuel shortage has seen prices rise more than 40% in the past year and are still rising.

A warning from a major US supplier of a “shortage” on the east coast earlier this month sparked rumors that fuel may even run out.

While diesel stocks in the United States are lower than in 1982, energy market experts he told CBS MoneyWatch that limited inventory was no cause for panicand the United States would not run out, at least not in the next few weeks and not unless the global supply chain was completely disrupted.

Indonesia G20
US Treasury Secretary Janet Yellen attends the launch of the Pandemic Fund at the 2nd Joint Meeting of G20 Health and Finance Ministers ahead of the G20 Leaders Summit, in Bali, Indonesia on November 13, 2022.

Dita Alangkara / AP

Yellen shared that optimism, but with caution. Asked by Cordes if the US had enough diesel to make it through the winter, he said, “Hopefully, I believe there will be,” but acknowledged that there would be “some shortages and low stocks” on the east coast.

“Let’s hope we don’t see a further increase: prices have risen and we are monitoring the situation very closely,” he told Cordes, adding that the Biden administration has “conversed with the oil companies about it.”

Switch to “China-dependent” electric vehicles?

President Biden has talked a lot about his ambition to see half of the vehicles on US roads powered by electricity, not fossil fuels, by 2030, but the Pentagon recently called China’s dominance of the electric vehicle (EV) battery market a great challenge to this. objective.

Most of the raw materials used to make lithium-ion vehicle batteries are manufactured by China, and Yellen acknowledged that the US and its auto industry has “relied on China” so far.

Biden unveils $ 900 million electric vehicle plan


The Secretary of the Treasury said so the law on the reduction of inflation approved by Congress during the summer “contains incentives and provisions to change it and diversify our supply chains for battery components.”

“They are very strong incentives to invest in these minerals in the United States and other allies, so we are focusing a lot on that,” said Yellen, adding that from next year the companies assembling electric vehicles in North America will “require to procure. about 40% of minerals, or mineral processing, in the United States or other countries with which we have free trade areas, so over time I expect the situation to change and we will become less dependent on China. ”

Kristopher J. Brooks and Megan Cerullo of CBS MoneyWatch contributed to this report.


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