Senate confirms Janet Yellen as Secretary of the Treasury

Janet Yellen is the 78th Secretary of the Treasury.

The former Federal Reserve chairman and longtime economist secured enough votes in the Senate on Monday after a confirmation hearing on Jan. 19. Yellen was won over to President Joe Biden as chief financial officer after winning the election last year. She succeeds Steven Mnuchin, who stepped down on Wednesday after Biden's inauguration.

The newly minted cabinet official didn't talk much about crypto. During her tenure as head of the Federal Reserve Board, she stated that she was not a huge fan of Bitcoin but called for light regulation.

Yellen joins a finance department that oversees a variety of crypto-related rule proposals and implements President Biden's response to an economic crisis caused by the year-long global coronavirus pandemic. During her confirmation hearing, she requested a "great" relief from the government in order to assist US citizens.

“Neither the elected president nor I propose this aid package without recognizing the country's debt burden. But right now, when interest rates are at historic lows, we can act the smartest, ”she said in her opening speeches before Biden was sworn in as president. "In the long run, I believe the benefits will far outweigh the costs, especially when it comes to helping people who have had problems for a long time."

Yellen did not address the risk of increased inflation during the hearing, but said that maintaining the stability of the US financial system would be beneficial for both the US and other nations.

Although U.S. inflation has been below 2% in recent years, economists are watching the debt the nation is building as it tackles the ongoing COVID-19 pandemic.

"Special concern"

Yellen did not provide much guidance on how to address the issue of cryptocurrency regulation during her testimony or in written comments to the Senate Finance Committee after the hearing.

In response to a question from Senator Maggie Hassan (D-N.H.), She described the use of cryptocurrency in terrorist financing as "a special concern" during the hearing.

"We need to make sure that our ways of dealing with these issues, financing technology terrorists, change along with technological change," she said. "I think a lot (cryptocurrencies) are mostly used for illicit funding, at least in a transactional sense, and I think we really need to look into how we can limit their use."

However, she also said that legitimate uses should be encouraged and that cryptocurrencies have the potential to "improve the efficiency of the financial system".

It intends to work with the Federal Reserve and other financial regulators, including the Financial Crimes Enforcement Network (FinCEN), the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Office of Currency Auditors (OCC).

Continue reading: State of crypto: What the crypto world should look out for in the Biden era

While FinCEN is expected to continue operating under the direction of Director Kenneth Blanco, who took office in 2017, the other agencies are currently working under acting heads while Biden's candidates await their confirmation hearings.

Former CFTC chairman Gary Gensler has been named chairman of the SEC, currently overseen by Commissioner Allison Herren Lee. The CFTC is overseen by Commissioner Rostin Behnam. Georgetown University law professor Chris Brummer is said to have made Biden's election as chairman of the agency. According to reports, Biden will also enlist former U.S. Treasurer and Dean of the University of Michigan Ford School of Policy, Michael Barr, to lead the OCC, which is currently overseen by Blake Paulson.

Active problems

Yellen will oversee the completion and implementation or possible change of a variety of proposed rules, most of which focus on FinCEN and could have a direct impact on the crypto industry.

Most controversial is a proposed reporting rule cited by former Secretary Mnuchin. This would require the exchange to record counterparty information from transactions in non-hosted wallets, and the exchanges would be required to file transaction reports for transactions over $ 10,000 per day.

The comment deadline for the rule – originally just 15 days – was extended earlier this month, with various aspects receiving different extensions.

The industry has an additional 15 days to respond to the CTR request, which FinCEN says is in line with existing rules for cash transactions.

However, industry participants still have 45 days to respond to the counterparty's demands, which participants believe are far more difficult to meet. According to FinCEN, the extended deadline is due to the complexity of the problem.

Continue reading: The relationship between US sovereign debt and Bitcoin, explained

Other proposed rules that FinCEN are considering include a threshold rule that requires banks to collect and store money transfer information for transactions greater than $ 250 leaving or entering the US, whether in fiat or crypto.

This is far less than the current limit of at least $ 3,000. A public comment period for the proposal has already expired.

In late 2020, FinCEN also announced that overseas bank account holders would have to report cryptocurrency holdings in excess of $ 10,000, introducing an offshore reporting rule that is already in place for fiat into the crypto space.

The status of these rules is unclear.

In the area of ​​domestic banks, the OCC passed a rule that forbade banks not to lend to certain industries. This move appeared to be aimed primarily at the arms and energy sectors, but was seen as beneficial by the crypto industry. However, this rule was not submitted to the federal register until Biden took office, and one of his first acts was to freeze the implementation of all rules until his team can review them.

This rule is unlikely to be implemented.

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