The Treasury Secretary urges lawmakers to strengthen regulations governing cryptocurrencies, highlighting the need to address the risks of this volatile sector. Janet Yellen spoke out in favor of strict regulation of cryptocurrencies following the FTX collapse, emphasizing the need for effective oversight. Despite her anti-crypto stance, Yellen favors creating a “robust regulatory framework” with global collaboration rather than banning the assets.
United States Treasury Secretary Janet Yellen asks lawmakers to strengthen the regulatory framework for cryptocurrencies and stablecoins.
Yellen will testify today before the US House of Representatives Financial Services Committee. It will underline the urgent need for laws that address the risks of the cryptocurrency sector.
Stablecoin Rise
Perhaps the most notable point is the entry into force of the MiCA law in European territory, which has already caused several countries to begin to adapt their regulations to adjust these principles in their local legislation, as is the case of France and Spain.
As for stablecoins, these assets are at the center of the regulatory focus due to the boom generated in recent years. For example, the case of Tether’s USDT stands out, a currency of its type with the greatest global adoption, which has a market capitalization that exceeds USD $96.2 billion at the time of publication. This is followed by Circle’s USD Coin (USDC), which has more than $27.18 billion in circulating assets.
It is worth noting that the regulatory emphasis on stablecoins gained more strength after the events that occurred with Terra’s UST stablecoin, whose collapse meant the loss of billions for a large number of users internationally.
Janet Yellen Urges to Regulate Cryptocurrencies
Yellen’s comments come at a particularly notable time for the digital currency industry, as several international regulatory initiatives are looming to establish rules in this area. The Treasury has noted that many cryptocurrency platforms are not complying with regulations. Hence, Janet Yellen seeks to solve this with new laws. Yellen stated the following:
“The Council focuses on digital assets and related risks, such as those arising from executions on cryptoasset and stablecoin platforms, potential vulnerabilities arising from the volatility of cryptoasset prices and the proliferation of platforms that act outside or fail to comply with applicable laws and regulations.
Applicable rules and regulations must be enforced, and Congress must pass legislation regulating stablecoins and the spot market for cryptoassets other than securities.”
Yellen’s advocacy for a tougher regulatory environment is not without precedent. The bankruptcy of the FTX cryptocurrency exchange in November 2022 served as a reminder of the vulnerability of the sector.
After the bankruptcy, Yellen spoke out about the need for “more effective supervision of cryptocurrency markets,” emphasizing the urgency of closing regulatory loopholes to avoid future crises similar to that of FTX.
Yellen’s support of regulators, particularly the Securities and Exchange Commission (SEC) under Gary Gensler, further reinforces her rigorous approach to sector oversight. Despite Yellen’s strict stance against cryptocurrencies, regulation efforts are crucial.
Janet Yellen and her Petition for Crypto Regulation
Its objective is to protect the stability and integrity of the financial system. Cryptocurrency regulation is especially pertinent given the anticipated revenue growth of the US cryptocurrency sector.
With a projected compound annual growth rate (CAGR) of 9.10% from 2024 to 2028, the sector is projected to reach total revenue of $32.9 billion in 2028. However, the silver lining is that the United States Treasury Secretary does not advocate a total ban on crypto assets. Last year, at the G20 Summit in India, he supported the creation of a “robust regulatory framework.”
By Leonardo Perez
