Treasury Secretary-Nominee Janet Yellen Is Wrong; Crypto’s ‘Main’ Use Isn’t ‘Illicit Financing’
Janet Yellen shared concern regarding cryptocurrencies’ use for terrorist financing in front of the Senate Finance Committee on Tuesday during her confirmation hearing.
The Treasury Secretary-nominee who chaired the Federal Reserve from 2014 to 2018 is “not a fan” of Bitcoin or cryptocurrencies and has some negative remarks to share this time as well. Yellen in response to a question from Senator Maggie Hassan of New Hampshire on how her department would control crypto-financed crimes said,
“We need to make sure that our methods for dealing with these matters, with tech-terrorist financing, change along with changing technology.”
“Cryptocurrencies are of 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.”
Crypto Twitter (CT) found her issues “quite disappointing,” but as Jake Chervinksy, general counsel at Compound Finance, says, it is “just another of many in the decades-long crypto wars.”
Bitcoiners are upset about this. But given that bitcoin is supposed to be an open censorship-resistant financial layer, wouldn't they be more upset if Yellen dismissed bitcoin as not being a "particular concern" for terrorist financing? https://t.co/wCFlVKJgaD
— John Paul Koning (@jp_koning) January 20, 2021
What’s even more important here is that Yellen is wrong in her assumption that “many” of these digital currencies are being used primarily for illegal purposes.
According to the latest data from the blockchain analytics firm Chainalysis, criminal transactions only account for a mere 0.34% of all crypto activity in 2020, which has come down from 2.1% in 2019. However, the company did say that these numbers are a conservative estimate.
Besides her crypto remarks, Yellen also urged lawmakers to act big on stimulus relief and said interest rates would remain at their historic lows for a long time.
“Dovish Yellen, good for risk,” said trader and economist Alex Kruger. Although today Bitcoin and cryptocurrencies are continuing their fall from yesterday, “it's natural for major headlines to drive a correction.” Still, “this crypto market can go from flattish to burning hot in hours, as short term traders abuse leverage,” added Kruger.