Key Takeaways
- Janet Yellen states that cryptocurrencies have the potential to improve the financial system.
- She wants to curtail illegal activities whilst encouraging legitimate activities.
- She plans on creating an effective regulatory framework for cryptocurrencies.
Treasury Secretary Nominee Janet Yellen clarified her stance on crypto in a recent hearing, saying the technology had the potential to improve the current financial system.
Yellen Acknowledges the Potential of Crypto
On Jan. 19, 2021, Yellen expressed her negative outlook towards cryptocurrencies, saying they “are used at least in a [transactional] sense mainly for illicit finance.”
Despite this controversial statement, Yellen’s detailed response shows a much more nuanced understanding of the technology’s potential.
She wants to encourage the legitimate use of cryptocurrencies while curtailing the misuse of cryptocurrencies by bad-faith actors who use crypto nefariously. She also seeks to provide an effective regulatory framework for that purpose.
“I think it important we consider the benefits of cryptocurrencies and other digital assets, and the potential they have to improve the efficiency of the financial system,” Yellen stated.
She stated that she wants to combat financial terrorism, money laundering, and other nefarious activities that threaten U.S. national security interests while encouraging legitimate use cases for crypto.
Yellen intends on working with the Federal Reserve Board and other regulators to implement an effective regulatory framework for cryptocurrencies and other fintech innovations.
Overall, the steps Yellen has outlined will provide more certainty and help legitimize cryptocurrencies as a whole. Moreover, the regulatory framework that she plans to create will help bolster investors’ confidence, especially institutional investors.
Steven Mnuchin was the Treasury Secretary before Yellen. FinCEN introduced the controversial crypto wallet rule under his leadership to limit anonymity in the crypto space. However, since the Biden administration took over, that rule has been put on hold.
The Senate Finance Committee is expected to vote on Yellen’s nomination on Friday morning.
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