Important Cryptocurrency Statements From US Treasury Secretary Janet Yellen: Call to Congress!

The failures of Silicon Valley Bank and Signature Bank indicate that banking regulation and supervisory rules need to be reexamined to address the risks of the current banking system, US Treasury Secretary Janet Yellen said today.

Yellen Requests Stronger Regulation of “Non-Bank” Industries Including Cryptocurrencies

In her speech prepared to be presented to the National Association for Business Economics, Yellen addressed money market funds, hedge funds and cryptocurrency He called for stronger regulation of the growing non-bank or “shadow bank” sector, including its assets.

Yellen called for more regulation to address risks from non-bank institutions, including liquidity risks, and said rules should not allow risks to shift elsewhere in the financial system to avoid regulation.

He also said that the Biden administration continues to examine the potential for systemic risk from digital assets, a study that began before the collapse of cryptocurrency exchange FTX.

“Stablecoins Are Particularly Concern”

Yellen continued to make statements about cryptocurrencies in her speech:

“Stablecoins that invest in reserve assets to maintain a stable value against the dollar are of particular concern.”

Yellen said that like traditional funds, these can be forced to sell assets during times of stress.

“An attack on one stablecoin could cause panic in other stablecoins, causing wider sales,” Yellen said, adding that Congress should pass legislation to establish a comprehensive preventive regulatory framework for stablecoin issuers and other digital assets.

*Not investment advice.

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