E Janet Yellen Re: Cryptocurrencies And Terrorists

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In comments made during her confirmation hearing last week, Secretary of Treasury Janet Yellen said that transactions in cryptocurrencies, such as Bitcoin, were used "mainly for illicit financing" and suggested that lawmakers and regulators curtail their use due to terrorism concerns.

Here are the statements she made in response to a question from Sen. Maggie Hassan, who asked Yellen during her confirmation hearing on Tuesday about the dangers of terrorists using cryptocurrencies:

"You're absolutely right that the technologies to accomplish this change over time, and we need to make sure that our methods for dealing with these matters, with terrorist financing, change along with changing technology," Yellen said.

"Cryptocurrencies are a particular concern. I think many are used - at least in a transaction sense - mainly for illicit financing.

"And I think we really need to examine ways in which we can curtail their use and make sure that money laundering doesn't occur through those channels."  

ARE TERRORISTS USING BITCOIN?

Are terrorists using Bitcoin to finance their "illicit" activities? And, to what extent?

I understand the concern about money laundering, but it is doubtful that "many" cryptocurrencies are used "mainly for illicit financing". If that is the case, then why is the Secretary of Treasury encouraging lawmakers and regulators to "curtail" their use?

To answer that, we need to understand what Bitcoin and other cryptocurrencies are - in simple, straightforward terms.

Cryptocurrencies offer a PRIVATE process for digital transfer of money. Every single transaction is recorded within a decentralized tracking system. The privacy is attractive for tax and regulatory reasons.

Is tax-avoidance an issue of concern for Ms. Yellen? In her role as Secretary of Treasury, the answer is probably yes. Although, at this point, the volume of financial transactions in all cryptocurrencies likely isn't large enough to justify excessive concern on her part.

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Kelsey Williams is the author of two books: Inflation, What it is, What It Isn't, And Who's Responsible For It and  more

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