Treasury Secretary Yellen Calls for Federal Oversight on Cryptos

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On Tuesday, Treasury Secretary Janet Yellen appeared on Capitol Hill and urged Congress to take prompt action to establish federal regulations for the cryptocurrency sector.

The Financial Stability Oversight Council (FSOC) chair, Janet Yellen, told the House Financial Services Committee, “There are many areas with respect to digital assets where we do have clear regulatory authority, but we’ve identified some gaps” 

“It would be very useful for Congress to fill those gaps,” Yellen continued. She warned lawmakers that there are risks associated with cryptocurrency, citing possible bank runs on digital asset platforms and “vulnerabilities from crypto asset price volatility.”

Yellen stated that these attempts were ineffective when Committee Chairman Patrick McHenry, R-N.C., brought up the two bipartisan legislation that the House has produced, one on stablecoins and the other on the structure of the cryptocurrency market. 

As stated by the President’s Working Group on Financial Markets and the Financial Stability Observation Council, “stablecoins pose risks to the financial system that we would very much welcome an effort by Congress to create a regulatory framework that would be appropriate to address those risks.” 

Recently, a few jurisdictions have made steps to establish their regulatory requirements for stablecoin issuers, such as Wyoming and New York. 

Yellen insists that a federal policy is required, even though the Clarity for Payment Stablecoins Act, which is supported by Committee Republicans and some Democrats, protects state regulator authority. 

“FSOC believes that it is critical for there to be a federal regulatory floor that would apply to all states,” the representative stated. “A federal regulator should have the ability to decide if a stablecoin issuer should be barred…from issuing such an asset.”

Also Read: Federal Reserve Sues Bitcoin Magazine Over Critique

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