Janet Yellen Warns Misuse Of Cryptocurrency Is A ‘Growing Problem’

The U.S. Department of the Treasury hosted its inaugural Financial Sector Innovation Policy Roundtable. With Treasury Secretary Janet Yellen speaking at the event.

In her opening remarks Yellen expressed her concerns. Saying “We’re living amidst an explosion of risk related to fraud, money laundering, terrorist financing, and data privacy. As the pandemic has moved more of life online, crime has moved with it.”

Yellen continued on, noting her concerns with cryptocurrencies while also acknowledging its promising potential. “The misuse of cryptocurrencies and virtual assets is a growing problem too. I see the promise of these new technologies, but I also see the reality: cryptocurrencies have been used to launder the profits of online drug traffickers; they’ve been a tool to finance terrorism.”

“From my time at the Fed, I know the crucial role your institutions play in combating crimes like these. The private sector invests enormous resources, finding ways to stop bad actors from misusing existing technologies. You also develop new ones.”

Janet Yellen: Cryptocurrencies Are ‘Mainly For Illicit Financing’

These remarks follow Yellen’s words at her confirmation hearing in January which undoubtedly caused some concerns within the crypto industry. Yellen said that cryptocurrencies are ‘mainly for illicit financing,’ but a report from Chainalysis shows that just 0.34% of crypto transactions in 2020 were related to criminal activity.

Furthermore, other Bitcoin advocates believe that growth in the crypto markets means illicit transactions will be play a smaller role in the industry. They also note that government criticism is hypocritical as the majority of money laundering activities are done via fiat currency, namely the U.S. dollar.

Yellen has since, clarified her position and promised that there would be effective crypto regulation in the United States.

All of this comes in the midst of an increased surge in interest in crypto following the news of Tesla investing $1.5 billion in Bitcoin earlier this week. This cause the price of Bitcoin to reach new all-time highs of above $48,000.