Treasury Secretary Janet Yellen Emphasizes Need for Regulatory Framework for Crypto Market
The US Treasury Secretary thinks a CBDC possesses the advantages required for problem-solving in many cases.
US Treasury Secretary Janet Yellen has always been vocal about the need for a crypto regulatory framework and the potential impacts of a central bank digital currency (CBDC). Not once, not twice, the Treasury Secretary has expressed her concerns about the lack of a unified regulatory framework for crypto assets and their issuers. More recently, Yellen has stressed the importance of regulating the crypto space.
There is currently turmoil in the crypto industry, which has sent many cryptocurrencies down the line. With Bitcoin dropping more than 70% from its ATH, Ethereum has also lost its value, followed by other major altcoins. Let us not forget the TerraUSD crash that caused many to lose their investments.
Treasury Secretary Calls for Crypto Regulatory Framework
In a conversation on Oct. 12th, the Treasury Secretary re-emphasized the need for creating a regulatory framework for digital assets. Speaking at the International Monetary Fund’s (IMF) meeting, the Treasury Secretary said Terra poses some danger to the industry. She also referred to the tether stablecoin’s “breaking the buck” due to the crypto crash. In her opinion, there are lots of lapses in the crypto market that need attention. Yellen wants to work with Congress on the “holes” because it is a “tough thing” to handle digital finance’s regulation. She also mentioned that there are more existing regulations that are applicable to crypto “than people think.”
Like many who trust the CBDC’s ability to impact the crypto space, the US Treasury Secretary shares the same belief. She thinks a CBDC possesses the potential and advantages required for problem-solving in many cases. Even if its development may be time-consuming, it is “certainly worth getting involved in developing,” Yellen stated.
“We can continue to think about whether it’s right to implement,” but the US should be “in a position where we could issue one.”
FSOC’s Report on Security and Non-Security Differences
The Financial Stability Oversight Council (FSOC), where Yellen is a member, recently published a report on providing guidance on securities regulation. The Council wants Congress to define the difference between security and non-security. The group said they believe that federal agencies have the power to control a large percentage of the crypto industry. Apart from Yellen, other prominent names in the Council include Federal Reserve Chair Jerome Powell. Others are Rohit Chopra of Consumer Financial Protection Bureau Director, CFTC Chair Rostin Behnam, and more.
“Some characteristics of crypto-asset activities have acutely amplified instability within the crypto-asset ecosystem. Many crypto-asset activities lack basic risk controls to protect against run risk or to help ensure that leverage is not excessive. Crypto-asset prices appear to be primarily driven by speculation rather than grounded in current fundamental economic use cases, and prices have repeatedly recorded significant and broad declines,” the report reads.