US Treasury Secretary Yellen softens? Says cryptocurrency innovation ‘could be good’

US Treasury Secretary Janet Yellen has never been a proponent of cryptocurrencies. After serving as Fed chair, she said in 2018 that she “doesn’t like” Bitcoin (“not a fan” of Bitcoin) because of the lack of transactions on the network and the alleged excess of illegal transactions.

But in a recent interview with CNBC, she said that while there are still some concerns, her current attitude is not entirely negative.

“I’m a little skeptical because I think there are some legitimate concerns about bitcoin,” she told CNBC, “some of which are related to financial stability, consumer/investor protection, use for illicit transactions, etc. Cryptocurrencies, on the other hand, are There are also benefits, and we recognize that innovation in payment systems can be a healthy thing.”

She also said that Bitcoin and digital assets are not a fad. “It’s clear that cryptocurrencies are taking off,” she said. “It’s now playing an important role — not in transactions, but in the investment decisions of many Americans.”

Yellen’s slight change in tone may be due to evidence that the reality is the opposite of her fears — criminal businesses still prefer cash to launder money given the traceability of blockchain. Additionally, El Salvador and financial payments company Block’s experiments with the Lightning Network could see greater application in transactions.

Her changing views are crucial as President Biden this month tasked the Treasury Department and other government agencies with starting the process of creating a regulatory framework for the crypto industry. The Executive Order on Ensuring Responsible Development of Digital Assets gave agencies months to issue strategies ranging from ensuring cryptocurrencies cannot be used effectively for terrorist financing , to outlining consumer protection safeguards, all while maintaining America’s edge in innovation.

The goal, Yellen said, is to provide “advice to create a regulatory environment for innovation in health.”

The crypto industry has been calling for a regulatory framework, while maintaining some vigilance about the regulators tasked with creating it. U.S. SEC Chairman Gary Gensler has sought a broader role for the SEC, enabling it to oversee stablecoins and the broader cryptocurrency ecosystem. Many argue that Gensler and the SEC have relied too much on enforcement action without providing enough guidance on how to remain legal, including not sharing which assets are considered securities in some cases.

But Yellen may be more powerful than Gensler: She is the fourth-largest member of the Cabinet and the executive branch. It was Yellen who convened in July 2021 the president’s working group on financial markets — which brought together the SEC, CFTC, Office of the Comptroller of the Currency, and the Federal Reserve — to begin drafting regulations for stablecoins.

She may never be a fan of Bitcoin, but crypto industry advocates are analyzing her words to see if she is fair in her stance against cryptocurrencies.

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