Janet Yellen, who is expected to lead the Treasury Department for the incoming Biden Administration, described cryptocurrencies as a “particular concern” when it comes to terrorist financing.
Yellen made the remark during her Senate confirmation hearing in response to a question from Sen. Maggie Hassan (D-NH) who asked about “the potential for terrorists and criminals to use cryptocurrency to finance their activities.”
“I think many [cryptocurrencies] 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,” Yellen said Tuesday in remarks reported by Coindesk.
In her former post as Chair of the Federal Reserve, Yellen has spoken dismissively of Bitcoin and said she is “not a fan.” Her skepticism may arise in part from an incident famous in cryptocurrency circles that saw a man photo-bomb her at a meeting with a sign saying “Buy Bitcoin.”
Many in the crypto world claim Bitcoin is a superior currency because it is not prone to government-induced inflation—a claim that gained new momentum after central banks began printing money at record rates in order to provide economic stimulus during the pandemic. The stimulus led to a recent meme mocking the Fed called “Money printer go brrr.”
Cryptocurrency is unlikely to be a top order priority, however, for Yellen, who is expected to be confirmed to her Treasury Secretary post in the near future. At Tuesday’s Senate hearing, she said her initial focus will be on helping American workers and businesses hit hard by the pandemic. She also took swipes at China for unfair trade and monetary policies.
In later written comments to the Senate, Yellen expressed slightly more positive views about cryptocurrency:
While the cryptocurrency industry is likely to view Yellen’s latest remarks as a cause for concern, it is also optimistic that another Biden appointee—incoming SEC Commissioner Gary Gensler—will give them a potential champion in the federal government. Gensler, a former Goldman Sachs executive, has taught cryptocurrency courses at MIT.
As for Yellen, her comments come at a time when the federal government is proposing controversial new rules that impose additional customer reporting requirements on cryptocurrency businesses.
The U.S. Cryptocurrency industry, which must already comply with a raft of anti-money laundering rules, has claimed the new rules are more onerous than those imposed on banks and that they will inhibit innovation. Crypto advocates have long said technologies like Bitcoin are unfairly maligned, pointing out that crooks have long used currency like $100 bills and Apple gift cards for criminal ends.
The fate of the proposed rules, promulgated in the last days of the Trump administration, is unclear for now.
This story was updated to reflect Yellen’s later written comments.