US Treasury Secretary Janet Yellen’s stance on cryptocurrencies has softened, but skepticism remains in her speech on digital assets at American University this morning.
Specifically, Ms. Yellen stated that the financial industry, including the latest advancements in crypto, should be subject to comprehensive and neutral regulation to protect investors from scams, whether assets are stored on balance sheets or distributed ledgers.
In addition, Yellen also outlined plans by federal regulators to take into account the possibility of reducing reliance on centralized intermediaries, such as banks and credit card companies. She also explained her concerns about stablecoins.
“Most issuers say they back their coins with safe and liquid traditional assets. This way, whenever you want to exchange your stablecoin for dollars, the company has the money to do the exchange,” she said. “Right now, no one can guarantee you that’s going to happen.”
Her stance on stablecoins has been well documented.
Last summer, Yellen called on lawmakers to “act quickly to ensure there is an appropriate US regulatory framework” for stablecoins. Then in October, the Treasury Department said it would allow the U.S. Securities and Exchange Commission to take the lead in regulating stablecoins like Tether (USDT) and USD Coin (USDC).
In January, the Federal Reserve released a report stating that it was still studying the possibility of issuing a central bank digital currency (CBDC).
CBDCs are digital versions of state fiat currencies that can be used as legal tender, such as the Chinese digital yuan (e-CNY), the Bahamian sand dollar (B$ ) and Nigeria’s eNaira. Unlike decentralized cryptocurrencies like Bitcoin (BTC) or Ethereum (ETH), CBDCs are backed by the central bank of the state.
Ms.Yellen said US regulators are still looking into the benefits of CBDCs, adding that the Treasury Department will work with the White House and other agencies to issue reports on the cryptocurrency over the next six months. next month.
There have been some objections from lawmakers saying that CBDCs would pose too much of a privacy risk.
Congressman Tom Emmer (R-MN) sought to ban the US from issuing its own CBDC in January, saying that if users had to open an account with the Fed to access the currency, that would “put the Fed in a deadlock underground road like China’s digital dictatorship.”
Just last month, Senator Ted Cruz (R-TX) echoed Emmer’s concerns in his own legislation that would prohibit the Federal Reserve from issuing CBDCs directly to individuals.
“This CBDC model doesn’t just focus on Americans’ financial information, making it vulnerable,” he wrote in a press release on his website.
“For most Americans, many transactions take too long to settle. The combination of technological factors and business incentives creates a common, uncomfortable experience faced by tens of millions of Americans.”
The government has been under pressure for years to issue regulatory guidance on cryptocurrencies and blockchain technology. Yellen acknowledged the danger of further regulatory delays, recalling the events that caused the 2008 Great Recession.
“When regulations fail to keep pace with innovation, vulnerable people suffer the most,” she said. “This is a painful lesson we learned during the Global Financial Crisis.”