- As she has done severally before, US Treasury Secretary Janet Yellen urged increased oversight over the cryptocurrency industry.
- This time, however, she put on a ‘friendlier’ tone, saying financial innovation should be accommodated rather than stifled.
Once again, US Treasury Secretary Janet Yellen has called for comprehensive regulations for the cryptocurrency industry. In a Thursday speech at the American University, Washington, Yellen said increased oversight would protect consumers while allowing innovation.
As banks and other traditional financial firms become more involved in digital asset markets, regulatory frameworks will need to appropriately reflect the risks of these new activities,
And new types of intermediaries, such as digital asset exchanges and other digital native intermediaries, should be subject to appropriate forms of oversight,”
For a long time, Yellen, a former chair of the US Federal Reserve, was a staunch cryptocurrency critic. She even openly stated that she was not at all a fan of Bitcoin.
However, her opinion seems to have slightly altered following the confirmation of the Biden executive crypto order. Late last month Yellen said she now sees healthy innovation in the industry even though she has some concerns.
Yellen: Cryptocurrency requires comprehensive regulatory frameworks
Following the presidential green light, the US is now among the 100+ countries exploring central bank digital currencies (CBDCs). Yellen noted that such a currency will likely “require years of development, not months.” At present, China’s digital yuan is the most advanced and has now entered its third round of testing.
Other than a digital dollar, America now has a crypto taxation policy as part of funding its $1 trillion infrastructure bill. Congress also passed a law on the reporting requirements of those in the digital asset industry.
But even with this endorsement, leaders in the US and other nations worldwide are concerned about facilitating crime using crypto. Just three days ago, Germany cracked down on Hydra, the largest darknet marketplace, seizing Bitcoin worth $25 million. The US sanctioned the site, in addition to Garantex, a cryptocurrency exchange accused of collecting ransomware payments.
In her recent speech, Yellen warned that “‘financial innovation of the past has too often not benefited working families, and has sometimes exacerbated inequality.” She also noted that her department was working jointly with other lawmakers to regulate stablecoins.
Regulate without drowning technology
Moreover, she urged the creation of “tech neutral” regulations to protect businesses and consumers without choking innovation. “In many cases, regulators have authorities they can use to promote these objectives and Treasury supports those efforts,” Yellen said.
To the extent there are no gaps, we will make policy recommendations, including assessment of potential regulatory actions and legislative changes.
The CMIC Crypto advocate group has acknowledged the potentiality of fraud and manipulation in the cryptocurrency industry. It is now working towards mitigating the same while meeting regulators halfway.
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