US Treasury Secretary Yellen says crypto misuse is a growing problem

US Treasury Secretary Janet Yellen is concerned about the supposed criminal component of cryptocurrency.

In remarks on February 10 to a roundtable on innovation in the financial sector, US Treasury Secretary Janet Yellen said the misuse of cryptocurrencies and virtual assets was a growing problem along with cyber attacks caused by the global pandemic.

Minister Yellen said that despite the potential of new technologies such as cryptography, these assets remain associated with significant risks. “I see the promise of these new technologies, but I also see the truth: Cryptocurrencies were used to launder the profits of online drug dealers; they were a tool for financing terrorism,” Yellen said.

According to the official, the private sector is making a major contribution to the government’s efforts to combat these crypto-related crimes. “From my time at the Federal Reserve, I know the critical role your organizations play in fighting crimes like this. The private sector is investing massive resources, and finding ways to prevent bad actors from misusing existing technologies. You can also develop new tools,” Yellen said.

In the statement, Yellen also stressed the need for “fair innovation” to help “bring the benefits of the financial system and modern information technology to more people.” She said that an equitable innovation approach could be on par with the Treasury’s current slogan of “responsible innovation.”

Despite Yellen’s claim that cryptocurrency misuse was a “growing problem,” the number of cryptocurrency-related crimes appeared to have decreased in 2020. According to Chainalysis – one of the largest crypto-intelligence companies in the United States – the criminal share of all crypto activities in the year 2020 down to just 0.34%. In 2019, criminal activity accounted for more than 2% of the volume of cryptocurrency transactions, according to the company.

In January 2021, the US Department of Justice seized half a million dollars in cryptocurrency from a major malware operator with the help of Chainalysis.