Crypto could boost financial system, says Yellen

Treasury Secretary nominee Janet Yellen believes cryptocurrencies could potentially improve the current financial system

US President Joe Biden’s Treasury Secretary nominee Janet Yellen said that she sees several benefits to cryptocurrencies and would work to implement a regulatory framework for such fintech innovations. The former Fed Chair hit the headlines on Tuesday after a virtual hearing of the US Senate Finance Committee.

Democratic Senator Maggie Hassan asked Yellen about how she intends to respond to emerging financial technology serving as the gateway to funding criminal organisations and terrorists. Yellen termed cryptocurrencies as a growing concern in the United States, adding that they were mainly used to fund illicit activities. She added that the United States government needs to find ways to curtail the use of cryptocurrencies as part of their anti-money laundering fight.

However, Yellen’s remarks might not be as bearish as initially thought. In a written statement published on the Senate Finance Committee website, the former Fed Chair reiterates the need to curtail the use of cryptos for illicit activities. However, she added that she intends to encourage the use of digital assets for legal activities.

According to Yellen, it is essential to consider the benefits of cryptocurrencies and other digital assets. The United States government has to look at the potentials they have to improve the financial system’s efficiency.

The incoming Treasury Secretary added that she wants the US to lead the way in the areas of digital assets and financial technology. To achieve this purpose, Yellen intends to work alongside the Federal Reserve Board to develop a regulatory framework for crypto and other fintech innovations.

Yellen is one of the most experienced financial experts in the US. She served as the chair of the Federal Reserve under President Barack Obama. Yellen has a long history with Bitcoin after calling the cryptocurrency anything but useful in 2018.

Back then, Yellen didn’t hide her criticism for the cryptocurrency. She said Bitcoin is not used for a lot of transactions, its value is not stable and it is not an efficient means of processing payments due to its slow nature of handling payments. “It has difficulty because of its very decentralised nature“, she added.

Bitcoin has successfully changed a lot of minds over the past few years. Institutional investors were previously wary of Bitcoin and didn’t want to invest in cryptocurrencies for numerous reasons. However, they are entering the crypto space in droves and investing billions of dollars into the crypto assets.