Janet Yellen Says to "Consider the Benefits of Cryptocurrencies"
In a written response to the Senate Finance Committee on Thursday, Janet Yellen elaborated on her view of Bitcoin and other cryptocurrencies, to which she attributes the potential to "improve the efficiency of the financial system."
Former Federal Reserve chair Yellen has been nominated by President-Elect Biden to lead the Treasury, though has yet to be confirmed to this position.
The written comments come a couple of days after a Senate confirmation hearing, in which Yellen said that she sees Bitcoin and other cryptocurrencies as a "concern" due to potential terrorist financing and money laundering:
"I think many are used, at least in transactions 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."
Yellen is not known to be a fan of Bitcoin. In 2018, when asked about it, she established her stance that Bitcoin is not used as a means of payment or as a store of value due to its volatility:
"It has long been thought that for something to be a useful currency, it needs to be a stable source of value, and Bitcoin is anything but. It's not used for a lot of transactions, it's not a stable source of value, and it's not an efficient means of processing payments. It's very slow in handling payments. It has difficulty because of its very decentralized nature."
In her latest statement, Yellen adopts a more nuanced tone, although she still stresses that cryptocurrencies "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."
In the written response, she calls for an approach that encourages the legitimate use while cracking down on "malign and illegal activities."
Yellen further states that she intends "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."