Treasury secretary Janet Yellen recently gave a relatively measured approach outlining her thoughts on digital currencies. In her written testimony, Yellen said,
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. At the same time, we know they can be used to finance terrorism, facilitate money laundering, and support malign activities that threaten U.S. national security interests and the integrity of the U.S. and international financial systems. I think we need to look closely at how to encourage their use for legitimate activities while curtailing their use for malign and illegal activities. If confirmed, I intend to work closely with the Federal Reserve Board and the other federal banking and securities regulators on how to implement an effective regulatory framework for these and other fintech innovations.
The answer she provided in her written testimony is much more balanced than the answer she provided in her verbal testimony during her confirmation hearing, in which she said,
You’re absolutely right that the technologies to accomplish this change over time, and we need to make sure that our methods for dealing with these matters, with terrorist financing, change along with changing technology. Cryptocurrencies are a particular concern. I think many are used – at least in a transaction sense – mainly for illicit financing. And I think we really need to examine ways in which we can curtail their use and make sure that money laundering doesn’t occur through those channels.
New administration…new sentiment toward digital currency?
Yellen has yet to be confirmed as treasury secretary, but things are looking positive in that regard. After giving her spoken and written testimony, the Senate Financial Committee approved her nomination; from here, the vote will go to the Senate for a full chamber vote.
With the Biden administration, we are likely to get new guidelines regarding digital currency relative to previous years. Throughout 2020, central bank digital currencies and digital assets came onto the radar of the US government–one of the questions for Yellen in the written testimony even addressed the rate at which China was developing its “digital asset and financial technology space.”
That being said, it looks like government officials are expecting the Biden administration, or at the very least, Janet Yellen, to address the blockchain and digital currency markets at some point in the future.
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