Treasury Secretary Yellen Says Crypto Regulation Should Support Responsible Innovation, Manage Risks – Janet Yellen, the US Treasury Secretary, spoke about cryptocurrency regulation at American University’s Kogod School of Business Center for Innovation on Thursday.
“While digital assets are relatively new, they are part of a larger trend, the digitalization of finance, which has also been evolving for decades,” she explained.
Yellen talked about how bitcoin and other cryptocurrencies were started, the Bitcoin white paper, Satoshi Nakamoto, decentralized peer-to-peer systems, bitcoin’s volatility, the double-spend problem, and crypto acceptance, among other things. She also mentioned President Joe Biden’s recent executive order on crypto asset regulation.
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The treasury secretary then proceeded to share some lessons that apply “as we navigate the opportunities and challenges posed by these emerging technologies, noting that one of the lessons is that vulnerable people often suffer the most whenever regulation fails to keep up with innovation.”
She also talked about stablecoins. “Of course, stablecoins are just one piece of a much bigger ecosystem of digital assets,” Yellen cited, adding:
“Our regulatory frameworks should be built to encourage responsible innovation while also controlling risks, particularly those that threaten the financial system and economy.”
“As banks as well as other traditional financial institutions get more involved in the digital asset markets, legal frameworks would need to address the associated risks with these new activities,” she added.
“New sorts of intermediaries, including digital asset exchanges and other digital native middlemen, should also be subject to adequate monitoring.”
Additionally, Yellen stated:
“Risks and actions, not specific technologies, should be the focus of regulation.”
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She also stated: “Financial regulations must evolve as new technology allows new activities, goods, and services.” “However, the dangers connected with the services offered to homes and firms, rather than the underlying technology, should determine that approach.” “Regulation should be ‘tech neutral’ whenever possible.”
Yellen acknowledged the merits of cryptocurrency in March, stressing that the Treasury is working on crypto regulation. “Crypto has definitely risen by leaps and bounds, and it’s now playing a huge role, not really so much in transactions, but in investment decisions of lots of Americans,” she concluded.
