CRYPTO MOVERS AND PRICES
Crypto is continuing the second day of a broad sell-off with few exceptions. Spot volumes are below levels seen in the first 2 weeks of the year.
Crypto Story of the Day
Joe Biden’s pick for Treasury Secretary, Janet Yellen, said terrorism financing via crypto was “of particular concern” in an answer to a question regarding the department’s approach to illicit activities and terrorism. The statement speaks to U.S. regulators’ maintaining of crypto policy status quo under the Biden Administration.
The question, posed by Senator Maggie Hassan, asked Yellen to “outline some of these emerging technological concerns and how treasury should combat new forms of terrorism, criminal financing.” Yellen responded that the “methods for dealing with these matters… change along with changing technology.” Yellen went on to say that “cryptocurrencies are a particular concern” and that she believes “many are used, at least in a transactional sense, mainly for illicit financing.”
Yellen finished her answer by explaining that, in her view, authorities need to examine ways in which they can curtail the use of crypto in such circumstances and ensure that money laundering is not taking place using crypto.
Yellen, who served as Chair of the Federal Reserve under the Obama Administration from 2014 to 2018, has previously shared similar sentiment regarding BTC. For example, when speaking at the Canada Fintech Forum in 2018, she said that she is “not a fan” of cryptocurrency and that “there are hundreds of cryptocurrencies and maybe something is coming down the line that is more appealing but I think first of all, very few transactions are actually handled by bitcoin, and many of those do take place on bitcoin are illegal, illicit transactions.”
Yellen has, however, endorsed blockchain technology, describing it as “very important” with “implications for the way in which transactions are handled throughout the financial system” in 2017.
Yellen is poised to take over the Treasury at a moment when FinCEN’s proposed rules for crypto transaction reporting and data gathering are up for extended public comment and review. Previous Treasury Secretary Steve Mnuchin foreshadowed these rules in early 2020, stating that “[w]e want to make sure that technology moves forward; on the other hand, we want to make sure cryptocurrencies aren’t used for the equivalent of old Swiss secret number banking.”
Yesterday, the White House announced a “Regulatory Freeze Pending Review,” which would delay the implementation of FinCEN’s proposed rules regarding reporting and data gathering of crypto transactions. According to the text, those rules would be delayed by 60 days.
We've maintained that it’s naïve to believe the U.S. government would support any permissionless and pseudonymous payment networks explicitly designed to rival fiat currency. As such, Yellen’s statements that objectively overstate the use of cryptocurrencies for illicit activity while expressing doubt over their lawful uses falls in line with her associates throughout the U.S. regulatory apparatus. With this in mind, it’s a relatively bipartisan policy position to allow crypto to develop and embrace the innovation it brings, but only on the Government’s terms.
Yellen’s FinCEN will, as a result, likely move forward with equal commitment towards implementing its proposed crypto tracking rules and will maintain Mnuchin’s view that cryptocurrencies mustn’t be “used for the equivalent of old Swiss secret number banking.” While some in the crypto community are certainly welcoming a delay to the implementation of the FinCEN rules, we doubt that Yellen will deviate from Mnuchin’s approach or views on crypto, which she has clearly maintained herself for years.