However, defiance to digital currencies as payments and transfer vehicles still seems to remain. Partly because of steep costs of transactions, Bitcoin is not widely used for payments, and its future role looks limited.

Institutes in the U.S. have been working on new regulations to increase transparency in Bitcoin transfers and reduce the scope for money laundering. Ms Yellen, together with the Fed, is likely to adopt an even more traditional approach, treating the payments system as a quintessential public good.

The Fed is working together with foreign counterparts in inspecting the development of central bank digital currencies. It is almost certain that CBDCs will eventually be issued in the bigger jurisdictions, just as in China. However, they will be denominated in national currencies, not crypto.

All the private competitors denominated in new currencies, such as Bitcoin, will be highly regulated or actively discouraged. Hybrid stablecoins, like Facebook’s libra, that are attached to a single currency or other real assets might be more welcomed by central banks, in case they are easily transferable into traditional currencies. In addition, they may not be powered by blockchain. Each of the major central banks might develop its own distributed ledger system.