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Yellen’s previous history with crypto
Banning algorithmic stablecoins
Who could replace Yellen?
By Raphael Sanis
Edited by Charlie Mellor
14:39, 28 September 2022
Janet Yellen, Treasury Secretary for the United States, is leaving her position after the midterms, according to Axios.
While recognising the innovation, Yellen has taken a strong stance on the need for regulation in the crypto industry.
As the head of the national department for finance in the US, a new secretary could have significant impacts on the cryptocurrency industry.
Yellen has been categorised by some as having an anti-crypto stance with a history of highlighting its risks and advocating for regulation.
She advised against cryptocurrencies, including bitcoin (BTC), as a retirement plan at a New York Times’ event in Washington. According to Bloomberg, she said: “It’s not something that I would recommend to most people who are saving for their retirement. To me it’s very risky investment.”
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Yellen has also underlined the risks of cryptocurrencies after the collapse in May of TerraForm Labs’ terraUSD stablecoin and LUNA cryptocurrency. She argued it was a growing threat that could eventually “present the same kind of risks that we have known for centuries in connection with bank runs”.
On the other hand, the treasury secretary has recognised cryptocurrency’s innovative technology. But this is often shadowed by the need for regulation. In a speech at American University’s Kogod School of Business Center for Innovation, she said:
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Most recently, the House Committee of Financial Services has put together a draft on crypto law that would ban algorithmic stablecoins, such as terraUSD, according to Bloomberg
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The bill would make it illegal to mint or create new “endogenously collateralized stablecoins” for the next two years.
The next treasury secretary could have a great impact on not only this stablecoin rule, but wider crypto laws in the US.
The Axios report named the US Commerce Secretary Gina Raimondo and Vice Chair of the Federal Reserve Lael Brainard as possible successors.
Raimondo has so far had a fairly positive approach to cryptocurrencies. In a statement in March, following US President Joe Biden’s executive order on digital assets, she recognised the “profound implications” of cryptocurrencies. She said:
The current commerce secretary raised the challenges as well. Raimondo recognised threats, such as money laundering, “abusive activities”, and “other illicit 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 might pose risks to the stability of the broader financial system”.
But the process of electing a new treasury secretary will not be easy for Biden, according to Axios.
It said: “While [Yellen’s] potential departure 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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