What could Janet Yellen’s departure mean for crypto?
Janet Yellen, Treasury Secretary of the United States, is leaving her post after the midterms, according to Axios.
While acknowledging the innovation, Yellen has taken a strong stance on the need for regulation in the crypto industry.
As the head of the US Treasury Department, a new secretary could have significant implications for the cryptocurrency industry.
Yellen’s past history with crypto
Yellen has been categorized by some as having an anti-crypto stance with a history of highlighting the risks and advocating for regulation.
She discouraged cryptocurrencies, including bitcoin (BTC), as a retirement plan at a New York Times event in Washington. In accordance Bloomberg, she said: “It’s not something I would recommend to most people saving for retirement. For me, it is a very risky investment.”
BTC to USD
Yellen has also emphasized the risks of cryptocurrencies following the collapse in May of TerraForm Labs’ terraUSD stablecoin and LUNA cryptocurrency. She argued that it was a growing threat that could eventually “present the same kind of risk that we have known for centuries in connection with bank runs”.
On the other hand, the Minister of Finance has recognized the cryptocurrency’s innovative technology. But this is often overshadowed by the need for regulation. Speaking at American University’s Kogod School of Business Center for Innovation, she said:
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“We also need to be aware that past ‘financial innovation’ has too often not benefited working families and has sometimes exacerbated inequality, given rise to illicit financial risk and increased systemic financial risk.”
Ban algorithmic stablecoins
Most recently, the House Committee of Financial Services put together a draft crypto bill that would ban algorithmic stablecoins, such as terraUSD, according to Bloomberg
The bill would make it illegal to mint or create new “endogenous security stable coins” for the next two years.
The next Treasury Secretary could have a big impact on not just this stablecoin rule, but broader crypto laws in the US.
Who can replace Yellen?
The Axios the report named US Commerce Secretary Gina Raimondo and Federal Reserve Deputy Chair Lael Brainard as possible successors.
Raimondo has so far taken a rather positive approach to cryptocurrencies. In a statement in March, following US President Joe Biden’s executive order on digital assets, she acknowledged the “profound implications” of cryptocurrencies. She said:
“Digital assets and associated technologies hold significant potential for individual economic empowerment, financial inclusion, and strengthening America’s position as a world leader in innovative financial services.”
The current Commerce Secretary also addressed the challenges. Raimondo acknowledged threats, such as money laundering, “abusive activities” and “other illegal financing”.
Meanwhile, Brainard’s speech at the Bank of England conference in July raised concerns that the crypto ecosystem could become “so large or interconnected that it could pose a risk to the stability of the wider financial system”.
But the process of choosing a new finance secretary will not be easy for Biden, according to Axios.
It said, “Mens [Yellen’s] potential resignation would give Biden an opportunity to respond to public concern over his handling of the economy, it would also create an immediate political headache: finding a successor who can be confirmed by the Senate.”
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