Janet Yellen was appointed as the new US treasury secretary on 19 Jan 2021. She was the former chair of the Federal Reserve and an economist who secured enough votes for the secretary position.
When she was on the Federal Reserve Board, she said that she was not a fan of Bitcoin. She only talked about regulation on cryptocurrencies. However, she shared in a written statement that cryptocurrencies can be used for illegal transactions by terrorists and criminals.
She also mentioned that she would like to work closely with the financial regulators to bring a regulatory framework for cryptocurrencies. Although she thinks that cryptocurrencies are being used by criminals, they have the potential to revolutionize the financial system.
Why She Thinks Cryptocurrencies Are Used By Terrorists?
Here I have explained why she pointed out the illegal transactions of cryptocurrencies and wants to create a regulatory framework. I guess you know that cryptocurrencies are increasingly popular for the following features.
- Cross-border transactions.
- Anonymity and Transparency.
You can check out the ftnnews.com to know why cryptocurrencies are getting more popular in 2021. Although the above features have many positive fronts, they also have some downsides. Let me briefly explain every feature in detail so that you can relate to why the new treasury secretary thinks cryptos are the gateway for terrorists.
- Decentralization: The term decentralization simply tells that there is no central authority. That means the cryptocurrencies work through a platform where the transaction need not be approved by a central body like banks and financial institutions. It uses a public network where users can send and receive funds directly. This feature allows criminals and terrorists to make transactions without the knowledge of any regulatory body.
- Cross-Border Transactions: Another important aspect of cryptocurrencies is that there is no barrier to cross-border transactions. So, anyone from any country can send money to a user of a foreign country without the approval of the government or any exchange service. This opened the gateway for terrorists to send money in exchange for weapons and secret information.
- Anonymity and Transparency: The most important thing is users can also send money without revealing their real identity. That means criminals can create a virtual identity through crypto wallets and make illegal transactions. Although every user can see every transaction, it’s hard to identify the real identity. You can only know the public address of the user but not the real identity.
Apart from these setbacks, some past events like Mt. Gox and Silk Road also show that cryptocurrency platforms are the hub for money laundering.
Illegal Activities in the Crypto Market
The two major events involved in the crypto market are the two main pieces of evidence that show criminals use cryptocurrencies.
- Silk Road Darknet Event: Silk Road was a darknet website launched in 2011 for selling illegal drugs. More than 100,000 users are linked to this website for these unlawful activities. Reports show that over $1 billion Bitcoins were involved in illegal transactions due to their anonymous features.
- Gox Money Laundering Event: Mt.Gox was a Bitcoin exchange that was launched in 2010. Unfortunately, the exchange was defunct in 2014 after a huge amount of money was stolen from the customers. After this event, many people became skeptical about cryptocurrencies. However, the new crypto exchanges have come up with security features to eliminate money laundering.
These are some of the main reasons why the new US treasury secretary thinks that cryptocurrencies are gateways for criminals and terrorists. So, she wants to work with the government and financial regulators to set up a regulatory framework for cryptocurrencies.
With the presented facts above, it’s expected that the new treasury secretary wants to regulate cryptocurrencies. I think it’s a great thing because it can ensure safety, security, and reliability for the users. Above all, cryptocurrencies can become a global financial system in the future.