US Treasury Secretary Yellen wants more crypto regulation

On Jun 7, 2023

Amid escalating legal cases against prominent cryptocurrency platforms, Coinbase and Binance, U.S. Treasury Secretary Janet Yellen emphasized the need for stronger regulation to safeguard crypto users and investors.

Treasury Secretary Janet Yellen made some remarks on CNBC’s Squawk Box, publicly supporting the U.S. financial regulatory bodies, including the SEC and CFTC, in their quest to keep crypto users and investors safe. This comes in the backdrop of recent legal cases against crypto giants Coinbase and Binance.

But she didn’t give any specific comments on these individual lawsuits.

Interestingly, her statements are in line with a report from the Financial Stability Oversight Council (FSOC), where she also serves as chair. Last October, FSOC mentioned that cryptocurrencies, under certain circumstances, could threaten U.S. financial stability.

“We’ve identified a number of risks [with crypto]. I’m supportive of those agencies to use the tools they have,” says @SecYellen. “I see some holes in the system where additional regulation would be appropriate. We’d like to work with Congress to see additional regulation pass.” pic.twitter.com/leZjF5QRU0
— Squawk Box (@SquawkCNBC) June 7, 2023

Yellen believes that there are gaps in the existing crypto regulations that need to be filled. She voiced her wish for Congress to step in creating more robust regulations for crypto companies. According to Yellen, a collaborative approach between the Treasury Department and Congress could lead to more effective legislation.

In terms of legislating crypto, Congress hasn’t had much luck yet. No bill has become law as of now. The lack of progress is attributed to the clear partisan division on crypto-related matters.

A draft bill recently put forward by Republican Representatives Patrick McHenry and Glenn Thompson might make some headway in the ongoing CFTC and SEC dispute whether tokens are securities or commodities. If passed, this bill would allow token issuers to lobby for their currencies to be acknowledged as commodities.

Attention has also been drawn toward CBDCs. Two separate bills aimed at halting the progress of CBDCs have been presented, both backed by Republicans.

The Digital Dollar Pilot Prevention Act, introduced by Rep. Alex Mooney, has 16 cosponsors, all Republicans. And the CBDC Anti-Surveillance State Act, proposed by Rep. Tom Emmer in February, has 31 cosponsors — all Republican too.

When it comes to stablecoins, draft bills have been proposed by both sides of the aisle, but even bipartisan bills are facing difficulty making it through the necessary committees for a vote.

One example is the ‘Responsible Financial Innovation Act’, introduced last year by Senators Cynthia Lummis and Kirsten Gillibrand. Its goal is to legally integrate digital assets into the U.S. system, but it has yet to be reintroduced in the new Congress.

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