Treasury Secretary Nominee Yellen Will Favor Crypto Rules
The crypto industry could face renewed regulatory scrutiny over the next four years if Janet Yellen, selected by Joe Biden to head the Treasury Department, takes over management. During Tuesday’s confirmation hearing before the Senate Finance Committee, Senator Maggie Hassan (D-N.H.) asked Yellen about crypto use in criminal activity.
Yellen stated that cryptocurrencies are of particular concern, and she thinks they are often used for illegal financing, at least in terms of transactions.
He said he wanted to investigate how we could limit its use and ensure that [money laundering] does not occur via this channel.
Blockchain Attracts Criminals
Blockchain-based financial networks are attractive to criminals because they don’t require consumers to identify themselves – as most traditional financial networks require by law. With no person or organization controlling these networks, the government has no easy way to enforce money-laundering laws.
Rather than forcing the network itself to comply, US regulators – and many other jurisdictions – have focused on regulating bitcoin exchanges, which help consumers trade between dollars and cryptocurrencies. Once bitcoin exchanges determine who initially accepted a particular bitcoin payment, law enforcement agencies can often track subsequent payments through the open blockchain network ledger.
In December, Trump’s team out of the Financial Crimes Network – a treasury unit specializing in money laundering – proposed a new set of rules to tighten the money laundering screw based on cryptocurrency.
Under the new rules, cryptocurrency-based exchanges must report a FinCEN transaction whenever a customer makes a transaction with a cryptocurrency worth more than $ 10,000. It will reflect the existing practices under which traditional banks must report when a customer withdraws cash or makes a deposit of more than $ 10,000.
FinCEN to Impose New Rules
Even more controversial in the cryptocurrency world, FinCEN aims to impose new listing requirements for transactions involving users managing their private keys – referred to by FinCEN as unhosted wallets. As per the proposal, crypto exchange clients sending more than $ 3,000 to a hosted wallet must record the transaction, including the client’s identity initiating the payment.
These new rules do not take effect until Trump resigns from office. Hence, Biden’s in-depth team had to decide what to do with them. The Biden administration can sign, rewrite or delete existing rules. Yellen’s comments on Tuesday suggested she was unlikely to break the rules. If not, the Ministry of Finance will likely consider additional regulations regarding the blockchain economy in the next four years.
The former Federal Reserve chairman also said he would aggressively tackle climate change and could form a working group to examine the financial risks of climate change and related tax incentives.