In her first prepared speech devoted to the topic of digital assets, US Treasury Secretary Janet Yellen laid out a path to regulate crypto. She also stated that a US-issued central bank digital currency (CBDC) could take years to develop, Bloomberg reports.
In last week’s speech at the American University in Washington, DC, Yellen said that any regulations will have to be “tech neutral.” Yellen elaborated that digital asset issuers and service providers should focus on protecting consumers against fraud and misinformation, as well as adhere to tax laws.
The Treasury Secretary listed decentralization ⏤ the lack of dependence of crypto assets on any single firm ⏤ as a strength of the blockchain industry.
Yellen said that transparency and prevention of systemic risks and excesses in the crypto-asset industry remain concerns for regulators. She cited the need to prepare for changes to the structure of US financial systems due to the rise in crypto assets.
“While this could make markets less vulnerable to the failure of any particular firm, it is critical to ensure we maintain visibility into potential build-ups of systemic risk and continue to have effective tools for tamping down excesses where they arise,” the Treasury Secretary remarked.
Biden seeks recommendations to regulate crypto
President Biden has ordered regulators to conduct a six-month study on digital currencies and come up with recommendations for regulation. The study will include crypto assets like Bitcoin, stablecoins, and a hypothetical CBDC.
Politicians have expressed concern about the United States’ ability to keep up with the latest innovations in the blockchain industry. They have said that the rise of competing currencies like China’s digital yuan (e-CNY) could damage the U.S. dollar’s status as the world’s reserve currency.
Yellen says President Biden’s order for a six-month study of crypto could lead to a clearer roadmap to regulate crypto. “I won’t predict where this work will take us, but that does not mean we are navigating without a compass. Digital assets may be new, but many of the issues they present are not,” she said in her speech.
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