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Treasury Secretary Yellen says the regulatory frameworks for crypto assets in the U.S. should âsupport responsible innovation while managing risks.â She emphasized, âRegulation should be based on risks and activities, not specific technologies.â
Treasury Secretary Yellen on Crypto Regulation
U.S. Treasury Secretary Janet Yellen talked about crypto regulation Thursday at American Universityâs Kogod School of Business Center for Innovation.
âDigital assets may be relatively new, but they are part of a larger trend â the digitization of finance â that has been in the making for decades,â she began.
Yellen mentioned a wide range of topics relating to bitcoin and other cryptocurrencies, including how Bitcoin got started, Satoshi Nakamoto, the Bitcoin white paper, decentralized peer-to-peer systems, the double-spend problem, bitcoinâs volatility, and crypto adoption. Moreover, she referenced President Joe Bidenâs recent executive order on the regulation of crypto assets.
The treasury secretary proceeded to share some lessons that âapply as we navigate the opportunities and challenges posed by these emerging technologies,â she described, adding that one of the lessons is âWhen regulation fails to keep pace with innovation, vulnerable people often suffer the greatest harm.â
She also discussed stablecoins. âOf course, stablecoins are just one piece of a much larger ecosystem of digital assets,â Yellen said, elaborating:
Our regulatory frameworks should be designed to support responsible innovation while managing risks â especially those that could disrupt the financial system and economy.
âAs 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,â she detailed. âAnd, new types of intermediaries, such as digital asset exchanges and other digital native intermediaries, should be subject to appropriate forms of oversight.â
Furthermore, Yellen opined:
Regulation should be based on risks and activities, not specific technologies.
âWhen new technologies enable new activities, products, and services, financial regulations need to adjust,â she stressed. âBut, that process should be guided by the risks associated with the services provided to households and businesses, not the underlying technology. Wherever possible, regulation should be âtech neutral.'â
In March, Yellen admitted that crypto has benefits, noting that the Treasury is working on crypto regulation. âCrypto has obviously grown by leaps and bounds and itâs now playing a significant role, not really so much in transactions, but in investment decisions of lots of Americans,â she said.
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