Yellen to Seek “Effective Regulatory Framework” for Crypto

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  • Janet Yellen has been confirmed as the first female Treasury Secretary in U.S. history
  • Dr. Yellen caused a stir in the crypto community when she said in her confirmation hearing that cryptocurrencies were “of particular concern”
  • Her written testimony showed a more even-handed approach with a focus on “effective” regulations

Janet Yellen has been confirmed as the new Treasury Secretary, taking over from Steven Mnuchin, less than a week after sparking concern over her perspective on cryptocurrencies. Dr. Yellen, the first female Treasury Secretary in U.S. history, sounded the alarm within the cryptocurrency sector during her Senate confirmation hearing on January 19 when she said that cryptocurrencies were “of particular concern”, although she has since clarified her position on the matter.

Crypto Supporters Worried About Overreaching Regulation

Dr. Yellen was confirmed to the post of Treasury Secretary on Monday, six days after denouncing cryptocurrencies in her confirmation hearing and two years after saying she was “not a fan” of Bitcoin. Echoing the same sentiments as European Central Bank president Christine Lagarde, Dr. Yellen warned over the prospect of cryptocurrencies for criminal enterprise:

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 anti-money laundering doesn’t occur through those channels.

This sparked concern among crypto supporters who fear excessive regulations that will impinge on their privacy, such as former Treasury Secretary Mnuchin’s attempts to track every transaction over $3,000, a policy that is now on hold given the presidential transition.

Yellen Wants “Effective Regulatory Framework

Dr. Yellen seemed to offer a more even-handed approach to cryptocurrencies in her written testimony where she acknowledged the “potential they have to improve the efficiency of the financial system”. However, her focus is clearly on regulation:

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.

It seems therefore that any joy engendered by the delay in Mnuchin’s proposed changes may be short lived, with Yellen poised to take a long hard look at the virtues and, more importantly, the concerns surrounding cryptocurrencies.