Yellen warns 'misuse' of cryptocurrencies in terrorism a 'growing problem'

Bitcoin is a ‘great’ hedge against inflation due to its limited supply: Investment strategist

Strategic Wealth Partners investment strategist Luke Lloyd on his outlook for the market amid the coronavirus pandemic and inflation concerns.

Treasury Secretary Janet Yellen warned about an "explosion of risk" from digital markets, including the misuse of cryptocurrencies that can be used to launder to profits of online drug traffickers and to finance terrorism.

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"We’re living amidst an explosion of risk related to fraud, money laundering, terrorist financing, and data privacy," Yellen said in opening remarks at the Treasury's innovation policy roundtable released on Wednesday evening. "As the pandemic has moved more of life online, crime has moved with it. We’re seeing more – and more sophisticated – cyberattacks aimed at institutions that hold up our society: hospitals, schools, banks, and even our government."

TESLA WALKS TIGHTROPE WITH BITCOIN INVESTMENT

While the former Federal Reserve chairwoman said there's promise in the technology, she also called the "misuse of cryptocurrencies" a "growing problem."

"I also see the reality: cryptocurrencies have been used to launder the profits of online drug traffickers; they’ve been a tool to finance terrorism," she said. "From my time at the Fed, I know the crucial role your institutions play in combating crimes like these. The private sector invests enormous resources, finding ways to stop bad actors from misusing existing technologies. You also develop new ones."

Interest in cryptocurrency surged this week after Tesla announced that it had bought $1.5 billion worth of bitcoin. In a new Securities and Exchange Commission filing, the electric-car maker said that it bought the digital currency for “more flexibility to further diversify and maximize returns on our cash.”

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Tesla also said it will start accepting payments in bitcoin in exchange for its products “subject to applicable laws and initially on a limited basis," becoming the first automaker to do so.

The bitcoin price also surged on Thursday, soaring past $48,000, after Bank of New York Mellon and Mastercard said they had taken steps to allow customers to more easily use cryptocurrencies.

“BNY Mellon is proud to be the first global bank to announce plans to provide an integrated service for digital assets,” Roman Regelman, CEO of asset servicing and head of digital at BNY Mellon, said in a statement Thursday.

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