Treasury Secretary nominee says crypto has potential to improve the financial system

U.S. President Joe Biden's pick for Treasury Secretary Janet Yellen may see more benefits to cryptocurrency than her previous testimony indicated. 

After a virtual hearing of the U.S. Senate Finance Committee held on Tuesday, Yellen hit the headlines for her answer to Democratic Senator Maggie Hassan’s question about how she would respond to “emerging financial technology” being used to fund criminal organizations and terrorists. Yellen referred to cryptocurrencies as a “growing concern” in the U.S., said they were used “mainly for illicit financing” for the aforementioned groups, and that the U.S. government needed to examine ways to “curtail” the use of crypto as part of their anti-money laundering efforts.

However, her written statement published on the Senate Finance Committee website today suggests that Yellen’s views on crypto may not be as bearish as those remarks suggested. Though Yellen’s written statement reiterates the need to curtail the use of the crypto for “malign and illegal activities,” she also said that she planned to encourage the use of digital assets for “legitimate activities.”

Yellen said:

“I think it important we consider the benefits of cryptocurrencies and other digital assets, and the potential they have to improve the efficiency of the financial system.”

The future Treasury Secretary also said she wanted the United States to be a “leader in the digital asset and financial technology areas.” She added that she would help develop a regulatory framework for cryptocurrency “and other fintech innovations” by working with the Federal Reserve Board.

Yellen served as the chair of the Federal Reserve under U.S. President Barack Obama, and has been quiet on her views surrounding the crypto space since calling Bitcoin "anything but useful" in October 2018. She left her position as Fed chair in early 2018 following the 2017 bull run which drove Bitcoin (BTC) to a then all-time high.

The Senate Finance Committee is expected to vote on Yellen’s nomination tomorrow, after which it will go to the Senate chamber where Democrats hold a majority. If approved, Yellen would be the first woman to serve as Treasury Secretary.