Yellen crypto only curtail malign activities
Cryptocurrencies,  People,  Regulation

Janet Yellen clarifies crypto stance: Only wants to curtail ‘malign activities’

‘I think it important we consider the benefits of cryptocurrencies and other digital assets,’ the pick for U.S. Treasury Secretary says

Janet Yellen’s stance on cryptocurrencies may not be as scary as first thought.

President Joe Biden’s pick for Treasury Secretary set alarm bells ringing in the crypto markets earlier this week during a virtual confirmation hearing.

The former U.S. Federal Reserve chair said that she wanted to “curtail” the use of digital assets—amid concerns that it could be used for money laundering and the financing of terrorism.

But in a written submission to the Senate Finance Committee, Yellen’s approach to Bitcoin and other digital assets seemed to be a little softer. When asked about BTC, 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.”

Yellen reaffirmed that there is a risk that cryptocurrencies can be used to fund terrorist groups, serve as a conduit for money launderers, and provide financial backing for “malign activities that threaten U.S. national securities.”

However, in remarks that will be music to the ears of crypto companies that have been exasperated at the current regulatory landscape in the U.S., she stressed that she wants to “encourage their use for legitimate activities.” Yellen went on to say:

“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.”

Ripple CEO Brad Garlinghouse, whose company is currently locking horns with the SEC over the sale of XRP tokens, has been among those who have called for U.S. regulators to offer greater levels of clarity on where digital assets stand. Previously, he has threatened to move Ripple’s headquarters abroad to somewhere with a more advanced set of rules.

All eyes now are on the Senate, as its Finance Committee voted 26-0 to confirm Yellen’s appointment as Treasury Secretary earlier today.

There was another slice of good news for the crypto community on Jan. 20 when a last-minute attempt to force crypto exchanges to collect personal data was delayed.

It’s worth noting that President Biden wasn’t targeting this policy specifically. Instead, it came as part of a wider freeze on new regulations that was ordered by the new president on his first day in office.

The choice of Gary Gensler to head the Securities and Exchange Commission has also gone down a storm with many crypto enthusiasts, not least because he has served as a professor in digital currencies and blockchain at MIT. On Jan. 18, his nomination was made official.

And on Jan. 21, reports broke that two other senior regulatory appointments will go to people with strong crypto credentials. Reuters reported that DC FinTech Week conference founder and head Chris Brummer, a Georgetown University law professor, will be appointed chairman of the Commodity Futures Trading Commission (CFTC). In addition, the Wall Street Journal reported that former Ripple advisory board member Michael Barr will be appointed Comptroller of the Currency, the bank oversight role recently vacated by ex-Coinbase General Counsel Brian Brooks.

As Modern Consensus reported last week, Gensler’s tenure at the SEC will likely be much more crypto-focused than Trump Administration Chairman Jay Clayton’s, which was heavily criticized for failing to provide clear rules of the road for the cryptocurrency industry, and for steadfastly blocking Bitcoin exchange traded funds (ETFs).

In response to the nomination, blockchain intelligence firm CipherTrace tweeted that it expects to “see much greater clarity on market structure and infrastructure for crypto assets” from Gensler.

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Connor Sephton is a journalist with an interest in cryptocurrencies, personal finance, and financial inclusion—as well as the challenges the crypto industry faces in achieving mainstream adoption. He owns cryptocurrencies.