Yellen believes that Bitcoin has the potential to improve global transactions. She said that cryptocurrencies can improve the efficiency of the financial system.

President Joe Biden appointed Janet Yellen as the new US Secretary of the Treasury. The latter recently revealed her policy on Bitcoin and other cryptocurrencies.

The economist from the Bookings institution participated in a hearing before the Finance Committee of the US Senate. There she stated that she plans to encourage the use of cryptocurrencies for legitimate activities.

Additionally, she mentioned that Bitcoin and other cryptocurrencies have the potential to enhance global transactions.

Her recent statements come as a surprise, given that she described Bitcoin as a “highly speculative” asset when she was chairperson of the Federal Reserve. On that occasion, the economics professor recalled that the cryptocurrency is not legal tender in any country in the world.

Regulations on Bitcoin and Other Cryptocurrencies

During her participation in the hearing, she expressed her “willingness to help develop a regulatory framework for cryptocurrencies.” To do this, she said that she will work “jointly with the Federal Reserve.”

Senator Maggie Hassan consulted Yellen about fighting terrorist financing. She responded that it is necessary to ensure “that the methods for matters such as terrorist financing advance along with the technology.”

Hassan also asked her whether or not cryptocurrencies pose a threat to the economy. Yellen replied that “it is important to consider the benefits of cryptocurrencies and their potential to improve the financial system.” She said that they “can facilitate money laundering and support activities that threaten the national interests of the United States.” She recommended “taking a close look at how to encourage their use to restrict illegal and malicious activities.”

Yellen Finds Cryptocurrencies Useful

A document from the Finance Committee of the US Senate focuses mainly on the task that Janet Yellen will undertake. The new Secretary of the Treasury must support US citizens in rebuilding the nation’s economy.

Yellen has currently suggested that cryptocurrencies are useful, contrary to Cristine Lagarde’s opinion. According to the president of the European Central Bank, “Bitcoin is involved in some reprehensible business and laundering activities.” However, both officials said that they are in favor of regulating financial activity with Bitcoin and other cryptocurrencies.

In this regard, Janet Yellen said that cryptocurrencies are a particular concern. “I think that many are used in illicit financing, at least in terms of transactions. I think we need to look at ways to regulate their use and ensure that there is no money laundering through them,” said the Secretary of the Treasury.

Biden Pauses New Regulations on Bitcoin

US President Joe Biden recently ordered a freeze on all federal regulatory processes, including the proposed cryptocurrency KYC rules. He wants to make sure that those officials that he appointed have enough time to review the pending rules. To do this, he ordered to postpone the effective dates of these rules for at least 60 days.

In late 2020, the US Department of the Treasury proposed strict KYC regulations on cryptocurrencies. They asked exchanges to verify the identity of wallet owners whose transactions exceed USD 3,000. They also requested personal information such as name, address, and purpose of the transaction from the Financial Crimes Enforcement Network (FinCen). This last case involves transactions that exceed USD 10,000.

Continued fiscal easing, low-interest rates, and unsupported money printing will benefit Bitcoin. This crypto asset will remain attractive to investors seeking protection against an increasingly weak US dollar.

By Alexander Salazar

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