The Treasury nominee stated in her confirmation hearing that she sees blockchain financial networks as a lingering issue.

Cryptos may come under another magnifying glass during the Biden presidency if Joe Biden’s nominee for the Treasury Department passes the vote. Janet Yellen stated her mind during her confirmation hearing before the Senate Finance Committee regarding the usage of cryptos by terrorists and other criminal groups.

 

She highlighted that she believes that a lot of virtual coins are used for nefarious activities and illicit financing.

Yellen said that the goal of restricting cryptos is to study the ways that these money laundering activities can be stopped from happening on their usual channels.

Blockchain-founded financial networks are enticing to criminals since they do not ask users to take off the veil of anonymity — as most conventional financial networks do because of the law. Since no individual or organization is actually controlling these channels, there is no simple method for policymakers to make them follow the money-laundering legislation.

So rather than attempting to force the networks to comply, US regulators — and lots of other jurisdictions — have been focusing on regulating BTC exchanges that assist users in trade dollars and cryptos. When a BTC exchange can tell who initially got a specific Bitcoin payment, law enforcement can frequently track other payments via an open payment ledger on a network.

At the end of 2020, Trump’s team in the Treasury Department concentrated on money laundering, wanted to set new rules for fighting cryptocurrency-founded money laundering activities.

This would mean that crypto exchanges would have to file transfer papers with FinCEN each time a user makes a transfer of over 10k dollars. This would be similar to rules banks have – they report when users deposit or withdraw over 10k dollars.

This is already a pretty touchy topic, but FinCEN upped the stakes with its new proposal of keeping records for transfers involving customers who handle their own private keys, which are called “unhosted wallets” by the organization. To be more precise, this would mean that if a client of an exchange sends over 3000 dollars to such a wallet, the exchange would have to keep a track record of this, along with the identity of the client who performed the payment.

Such rules didn’t get a chance to be embraced before Trump left the White House, so it’s up to the new administration to finish the job. Will they sign off on the rules already in place? Will they rewrite them? Or forgo them totally? If Yellen’s statement is any indicator, forgoing is not really an option. What more, the Treasury Department will probably think about bringing in a bonus number of regulations and laws for the distributed ledger sector in the following four years.