U.S. Treasury Secretary Janet Yellen has made a strong call for Congress to introduce new legislation specifically tailored for the regulation of cryptocurrencies. Yellen emphasized the need to address systemic risks in the crypto market that are not effectively covered by existing laws.
During a hearing before the House Financial Services Committee, Yellen highlighted the urgency for regulations focused on stablecoins and the spot market for crypto tokens that are not classified as securities. She emphasized the potential for digital assets to impact the nation’s financial stability, citing concerns about “runs” on exchanges or stablecoin providers and the inherent volatility of the crypto market.
Yellen has been advocating for a new regulatory framework for stablecoins, expressing concerns about their growing use in payments and potential for facilitating money laundering. However, progress on crypto legislation has been slow due to bipartisan deadlock within Congress, with Democrats questioning whether crypto warrants dedicated attention from Capitol Hill.
The regulatory landscape for cryptocurrencies is further complicated by disagreements among the nation’s chief market regulators. The Securities and Exchange Commission (SEC) contends that most cryptos should be classified as securities, while the chairman of the agency, Gary Gensler, believes that existing laws are sufficient and that industry leaders are choosing not to comply with regulations.
Yellen’s remarks indicate a rift in views from the SEC, as she emphasized the need to address gaps in regulatory authority and the supervision of spot markets for commodities like Bitcoin. Additionally, Yellen underscored the importance of creating regulatory protections for stablecoin wallet holders and proposed granting federal regulators the authority to shut down stablecoin issuers that fail to meet regulatory standards.
Notably, Tether, the issuer of the world’s largest stablecoin, has nearly issued 100 billion dollar-backed USDT tokens across multiple blockchains, drawing attention to concerns about the stability and regulation of stablecoins.
Overall, Yellen’s call for new legislation reflects the growing complexities and challenges posed by the rapid evolution of the crypto market. As the debate over the regulatory framework for cryptocurrencies continues, it is evident that concerted efforts are needed to develop a comprehensive and effective regulatory framework that addresses the unique risks and opportunities presented by digital assets.