Abstract：In her speech about digital assets, the Treasury Secretary seemed to acknowledge that the rise of cryptocurrencies such as Bitcoin had put significant pressure on the global financial system and that the current system needs to upgrade, speed itself and cut costs to end-users. However, she also stated that the system required suggestions to help it improve further.
The US Treasury Secretary Janet Yellen gave a speech about digital assets at the American University, Washington DC, and spoke about the digital assets policy, innovation, and regulation. She acknowledged crypto and its wide-ranging potential but also threw her backing behind sovereign money.
Janet Yellen Acknowledges Pressure On Financial System
In her speech about digital assets, the Treasury Secretary seemed to acknowledge that the rise of cryptocurrencies such as Bitcoin had put significant pressure on the global financial system and that the current system needs to upgrade, speed itself and cut costs to end-users. However, she also stated that the system required suggestions to help it improve further.
Reacting to the speech, Michael Saylor tweeted that it could be viewed as a critical milestone and could potentially mark the inflection point for the worldwide adoption of Bitcoin. On the Crypto Banter YouTube Show, Saylor had earlier stated that Secretary Yellen, who was a vocal critic of crypto and Bitcoin, was seemingly softening her stance towards digital assets.
Highlighting The Shortcomings In Traditional Finance
The Treasury Secretary acknowledged a couple of prominent shortcomings in traditional finance, shortcomings that cryptocurrencies like Bitcoin have done well to address. She stated that settlements take a considerable amount of time, despite new technologies that have made the current financial system more efficient. However, most Americans still feel that transactions take longer than they should to settle.
She highlighted that such delays had a considerable impact on financially distressed people, where the party in need of the money does not see it soon enough or on time.
Cryptocurrencies Do It Better
She acknowledged cryptocurrencies and their role in improving settlement speeds, stating that the rise of cryptocurrencies could be the catalyst needed to improve the existing system. Giving the example of Bitcoin, Yellen stated that BTC could settle any amount, anywhere in the world, in just ten minutes, with cryptocurrencies coming after Bitcoin capable of even faster settlement times.
Cryptocurrencies do seem to have awoken the Fed from its slumber with the release of FedNow. FedNow promises to complete traditional transfer payments almost instantly, which could pose a challenge to one of the most important aspects of cryptocurrencies.
Costly International Payments
The Secretary highlighted the problem of international transfers and how expensive it is to conduct cross-border transactions. While blockchains feature the same transaction cost, Yellen argued that it remains to be seen if the technology can live up to that promise, stating,
Will the technology live up to that promise？ I think its too early to tell. Issues like processing time, cost, and technological barriers to access will need to be overcome.
Previous Anti Crypto Stand
Secretary Yellen was vehemently anti-crypto and had gone after crypto in 2021 when she proposed an “unrealised capital gains tax” that could have had devastating consequences for crypto holders. She also stated that cryptocurrencies are mainly being used for money laundering and illicit financing.
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