Janet Yellen stated, “Digital asset exchanges and other digital native middlemen should be subject to proper types of oversight.”
Stablecoins are one of the primary policy issues for regulators in the digital asset industry, according to US Treasury Secretary Janet Yellen, who says they are now subject to “inconsistent and fragmented monitoring.”
Yellen said the Treasury Department was working with Congress to pass legislation to assist ensure that “stablecoins are robust to threats” for consumers and the US financial system, speaking to attendees at American University in Washington, D.C. on Thursday. While stablecoins sparked “regulatory concerns” and questions about the coins’ reserve assets, many aspects of the digital asset ecosystem, according to the Treasury Secretary, posed potential hazards that might worsen inequality.
“Our regulatory frameworks should be structured to encourage responsible innovation while controlling risks, particularly those that threaten the financial system and economy,” Yellen added. “As banks and other traditional financial firms become more involved in digital asset markets, regulatory frameworks will need to reflect the risks associated with these new activities adequately.” And new sorts of intermediaries, such as digital asset exchanges and other digital native middlemen, should be regulated appropriately.”
Yellen referenced a November report from the President’s Working Group on Financial Markets, which recommended that stablecoin issuers be subjected to “adequate regulatory monitoring” similar to regular banks. She also expressed reservations about the Federal Reserve creating a digital currency in the United States, claiming that the project would be a “huge design and engineering challenge” that would take “years to develop.”
“I share the President’s urgency in moving research forward to better understand the risks and opportunities that a CBDC could bring to American interests,” Yellen stated.
Addressing the regulatory problems posed by digital assets appears to be a top priority for US President Joe Biden, who signed an executive order in March to examine the implementation of a comprehensive crypto regulatory framework. Over the next six months, Yellen said, the Treasury Department will collaborate with the White House and other government agencies to “create fundamental papers” on policy recommendations for minimising both systemic and consumer risks associated with digital assets.
The Treasury Secretary’s remarks come after she testified before the House Financial Services Committee on Wednesday that the agency has not observed any substantial incidents of Russian people and businesses targeted in recent penalties using bitcoin to circumvent financial sanctions. The Treasury Department’s Office of Foreign Assets Control issued sanctions on virtual currency exchange Garantex and darknet marketplace Hydra on Tuesday.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.
