Yellen says Treasury will fight misuse of cryptocurrencies

Reuters reports that the US Treasury Secretary Janet Yellen has warned about an "explosion of risk" related to digital markets, including the misuse of cryptocurrencies, but said new financial technologies could help fight crime and reduce inequality.

''In remarks to a financial sector innovation roundtable, Yellen said that cryptocurrencies have been used to launder the profits of online drug traffickers and to finance terrorism,'' the article reads. 

''But she said innovation in the sector could help address these problems and reduce digital gaps dividing the country.

'Innovation should not just be a shield to protect against bad actors. Innovation should also be a ladder to help more people climb to a higher quality of life,' she said.''

Key comments

US Treasury Secretary Yellen says US seeing 'explosion of risk' related to fraud, money laundering, terrorist financing and data privacy.

Says pandemic highlighted problems of 'broadband deserts', lack of access to financial services for millions of people

Says treasury can leverage financial sector innovation to combat problems, promote financial inclusion and improve competitiveness

In remarks to regulators, she says misuse of cryptocurrencies and virtual assets is a growing problem.

''Cryptocurrencies have been used to launder profits of online drug traffickers, finance terrorism.'' 

Market implications

The market's fragility to regulation is a bearish factor for crypto. 

Meanwhile, in other related news, a positive for the market, Mastercard has announced that it will start supporting select cryptocurrencies directly on their network.