On Friday, U.S. Treasury Secretary Janet Yellen said during an interview with CNBC that cryptocurrencies are an innovative payment option and have various benefits to users.
“Crypto has obviously grown by leaps and bounds, and is now playing a significant role not really so much in transactions but in investment decisions of lots of Americans…There are benefits from crypto, and we recognize the innovation in the payment system can be a healthy thing,” Yellen said in the interview.
This is a surprising reversal from the Treasury Department. Last year, the Treasury did not support changes to the massive infrastructure bill making crypto tax reporting expensive and difficult for many individual users; imposed crypto sanctions to slow ransomware; as well as issued several warnings that digital assets would weaken the U.S. economy.
“To the extent it [Bitcoin] is used I fear it’s often for illicit finance. It’s an extremely inefficient way of conducting transactions, and the amount of energy that’s consumed in processing those transactions is staggering…It is a highly speculative asset and you know I think people should be aware it can be extremely volatile and I do worry about potential losses that investors can suffer,” Yellen said during an interview with CNBC in February 2021.
She went on to say in Friday’s briefing that the Treasury plans to make common sense regulatory recommendations that address consumer and investor protections, reduce criminal use of crypto, maintain stability of financial markets without stifling innovation. It’s possible that the change in her outlook could be driven by President Biden’s executive order earlier this month that charged most of the agencies within the executive branch to research and report back as to how their respective organizations can craft and enforce the much-needed regulatory alchemy for cryptocurrencies.
Of particular note in the president’s directive were the six areas of focus that the cross-agency study group will address. Those priorities were outlined in the White House fact sheet and include: U.S. leadership in the global financial system and economic competitiveness; financial stability; responsible innovation; consumer and investor protection; financial inclusion; and illicit finance.