Janet Yellen, the new U.S. Treasury Secretary, has warned about “a growing problem” from “the misuse of cryptocurrencies.” She emphasized that “cryptocurrencies have been used to launder the profits of online drug traffickers; they’ve been a tool to finance terrorism.”
Janet Yellen Warns of Cryptocurrency Risks
The U.S. Department of the Treasury hosted its inaugural Financial Sector Innovation Policy Roundtable on Feb. 9 and 10. “The Roundtable brought together policymakers and regulators with experts from the private sector to exchange views for collaborating on policy issues and innovative technologies,” the department described.
Treasury Secretary Janet Yellen briefly talked about cryptocurrencies during her opening remarks at the event. “We’re living amidst an explosion of risk related to fraud, money laundering, terrorist financing, and data privacy. As the pandemic has moved more of life online, crime has moved with it,” she opined. One of the problems she outlined concerns cryptocurrency.
The misuse of cryptocurrencies and virtual assets is a growing problem, too. I see the promise of these new technologies, but I also see the reality: cryptocurrencies have been used to launder the profits of online drug traffickers; they’ve been a tool to finance terrorism.
“From my time at the Fed, I know the crucial role your institutions play in combating crimes like these,” she told the event participants. “The private sector invests enormous resources, finding ways to stop bad actors from misusing existing technologies. You also develop new ones.”
At her Senate confirmation hearing, Yellen caused quite a stir in the crypto community by saying that cryptocurrencies are “mainly for illicit financing.” However, a report by blockchain analytics firm Chainalysis shows that only 0.34% of all crypto transactions last year were related to criminal activities. Many also pointed out that the majority of money laundering activities are done via fiat currencies, particularly the U.S. dollar.
Yellen subsequently clarified her position regarding cryptocurrencies and promised “effective” crypto regulation. Meanwhile, the pro-bitcoin U.S. Senator Cynthia Lummis has talked to Yellen about cryptocurrencies and is planning to convince the Treasury Secretary that bitcoin is “a great store of value.”
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