Janet Yellen says ‘misuse’ of cryptocurrencies like bitcoin is a growing problem as regulators tighten sc.. – Business Insider

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Janet Yellen has previously warned about the illegal use of cryptocurrencies like bitcoin

US Treasury Secretary Janet Yellen has called the “misuse of cryptocurrencies” such as bitcoin a growing problem, in a sign that policymakers are increasing their scrutiny of digital assets.

Yet the Treasury Secretary – who took up her post in January – also said she saw “the promise” of cryptocurrencies, in opening remarks at the Treasury’s innovation policy roundtable released on Wednesday evening.

There has been another surge in interest in cryptocurrencies over the last few days, after Elon Musk’s electric-car company Tesla revealed it had bought $1.5 billion of bitcoin and intended to accept it as payment.

The bitcoin price jumped to an all-time high of above $48,000 on Tuesday. It was down around 3% to $45,800 as of 5.30am ET on Thursday.

The stampede into cryptocurrencies has caught the attention of regulators and policymakers.

Yellen told the Treasury’s financial sector innovation policy roundtable “the misuse of cryptocurrencies and virtual assets is a growing problem.”

Read more: A Ruffer portfolio manager invested a portion of his $4.8 billion fund in Bitcoin. Here’s what swayed him to bet on crypto – and the 2 other ways he’s hedging against worrying speculative bubbles

She added: “I see the promise of these new technologies, but I also see the reality: cryptocurrencies have been used to launder the profits of online drug traffickers; they’ve been a tool to finance terrorism.”

Yellen did not elaborate on the “promise” that the technologies hold in the remarks released by the Treasury department.

Her words echoed comments she made in her hearing for the role of Treasury secretary in January, when she said: “I think we really need to examine ways in which we can curtail [cryptocurrencies’] use and make sure that money laundering doesn’t occur through those channels.”

Advocates of bitcoin and other cryptocurrencies – which are not regulated by a central authority – say that the rapid growth in the market means illicit transactions play a smaller and smaller role.

They also argue that criticism from the US government is hypocritical, because big banks and the dollar play a much bigger role in funding illegal activity.

Soaring levels of interest in bitcoin led the UK regulator to warn potential buyers in January they could “lose all their money” thanks to the wild swings in the value of the token.

The UK watchdog now requires crypto companies to register with it as part of its anti-money laundering regulations.

Read More: The CIO of a $700 million crypto asset manager breaks down why Elon Musk’s gradual acceptance of bitcoin means the digital currency has room to run – and shares why it’s launching an over-the-counter fund

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