Secretary Yellen’s first action on bitcoin will set the tone for the next four years

If there is one thing that criminals crave, it’s anonymity. The ability to cloak their illicit activities behind layers of privacy — or to blend in with everyone else — gives bad actors an edge in every arena. Terrorists, in particular, use layers of anonymity and inconspicuousness to finance their activities, allowing them to grow their ranks, form plans and carry out attacks. Traditional finance is unable to slow the growing terror threat; only cryptocurrency can stop it in its tracks.

Currencies based around blockchain technology are currencies that have an open public ledger — an accessible running list of every transaction that has ever been made. For example, anyone can search the bitcoin blockchain to see which wallets sent currency to which wallets, how much that transaction was for and when it occurred. Bitcoin wallets that are known to belong to terrorist organizations, terror financiers and other nefarious parties can be flagged, monitored and blocked from making and receiving transactions. 

Cryptocurrencies offer the only way to truly assess and intervene when it comes to money laundering, terror financing, human trafficking and so much more. The idea that cryptocurrencies present increased risk is a misnomer; fiat currencies have been the traditional means to finance crime, and cryptocurrencies have always presented more risk to criminals who would prefer to remain anonymous. The vast majority of crime has been financed by fiat money — both digitally and in the form of cash — because fiat money offers an opportunity for anonymity and inconspicuousness.

The recent guidelines proposed by the Financial Crimes Enforcement Network further sharpen the tools that cryptocurrency offers, requiring every cryptocurrency wallet to be tied to a verified identity. While this would be helpful for tracking cryptocurrency transactions, it’s not required; whether or not a cryptocurrency wallet is tied to a publicly verified identity, investigators can still swiftly and easily determine who controls a cryptocurrency wallet by simply monitoring its use, commonly referred to as “blockchain transaction analysis.” Unregulated, the cryptocurrency industry has thus far been self-policing, with many cryptocurrency companies moving to block wallets that are known to belong to criminals, scammers, hackers, terrorists and more. 

As we move further into the 2020s, America will find itself at a crossroads. The rate at which we innovate will continue to accelerate at a breathtaking speed, and the opportunities for dishonest and dangerous people to harm Americans will also increase. Cryptocurrency offers a way to track every financial transaction that is made — a feat that is not possible with fiat money. If America wants to remain a dominant economic power and continue innovating at ever-increasing speeds — while simultaneously reducing the risk posed to American families — the new Biden administration should move to embrace cryptocurrency at all levels, including within the Treasury and at the Federal Reserve.

Incoming Treasury Secretary Janet Yellen has revealed some reservations about cryptocurrency, especially as it could relate to crime and terrorism. Yellen’s concern is genuine and should be taken seriously. Fortunately, I know that Yellen is an astute and educated person, highly capable and fully qualified for such a time as this. If there is anybody who could navigate these waters and see the potential that cryptocurrency can offer to the United States government, it would be Secretary Yellen.

I encourage Secretary Yellen to closely examine the advantages that cryptocurrency can offer when it comes to crime reduction, terror prevention, elimination of counterfeit money and the creation of a safer environment for small businesses in a post-pandemic world. Every effort the United States government is taking to protect American families can be improved by working with innovators in the cryptocurrency industry to find dynamic solutions to new problems.

With direct knowledge of how to audit blockchain transactions and track wallets, experienced professionals in the cryptocurrency industry can demonstrate how to monitor payments and fight crime in real time.

We have bootstrapped this industry from the beginning. Now we’re eager to cooperate with the government to make the traditional and decentralized financial industries integrate seamlessly.

We all benefit when regulators and innovators work together; let’s do that once again.

Marshall Hayner, CEO of Metal, the first digital crypto banking platform formed in 2016, has 10 years of cryptocurrency, blockchain and related banking experience. Prior to Metal, he created the first Facebook integrated Bitcoin wallet, QuickCoin, in 2013, and the following year launched Stellar blockchain. He has advised numerous blockchain and cryptocurrency startups. Follow him on Twitter @MarshallHayner.