- In a recent speech, US Treasury Secretary Janet Yellen highlighted the need for a crypto regulatory framework to support regulation in the space.
Speaking at the American University in Washington on Thursday, Yellen said: crypto asset regulations; He said it should also support prudent innovation while managing risks and adhere to the outlines of the recent White House executive order, which was well received by the crypto market.
Speaking on the digital assets policy released by the Treasury, Yellen noted that in many cases, regulators already have the powers to manage crypto risks and provide appropriate oversight for new types of intermediaries such as digital asset exchanges.
“Our regulatory frameworks should be designed to encourage responsible innovation, particularly when managing risks that threaten the financial system and economy. As banks and other traditional financial institutions become more involved in digital asset markets, regulatory frameworks will need to appropriately reflect the risks of these new activities.”
Caution should be exercised when mainstream financial systems enter crypto
Banks and other financial institutions have recently become more interested in cryptocurrency. According to reports, some banks are even starting to include digital assets in their employees’ retirement plans, giving them exposure to cryptocurrency and the risks associated with crypto investments.
Yellen said it is necessary for the regulatory framework to highlight these risks so that mainstream financial institutions entering the field are aware of them and can make informed decisions.
Until now, there was no clear regulatory framework for cryptocurrencies in the United States, but regulators are currently looking for ways to provide oversight on crypto exchanges and banks that provide crypto services such as crypto custody.
Some lawmakers want regulators to put pressure on the industry due to the volatility in crypto-asset valuations, causing some markets to worry about tough new rules. But the White House and Treasury message to support responsible innovation calmed some of these fears.
Biden’s executive order has already made provisions for the Treasury and Commerce departments to explore the role cryptocurrencies will play in the future of money. This shows that the government is willing to deal with the emerging crypto space.
The crypto community also responded positively to the executive order, especially as it seeks to support innovative projects that have the potential to revolutionize the financial industry.
Consumer protection is paramount in cryptocurrency regulations
Although cryptocurrencies are new and come with new possibilities, Yellen says they should be treated the same as any other service because what matters is the service they provide, not the technology that supports it. The treasury secretary emphasizes the protection of consumers, investors and businesses, while custodians must ensure that clients’ funds are not lost.
Yellen’s emphasis on supporting good and innovative crypto projects rather than crashing them has helped the crypto community and regulators agree on crypto regulations that will help boost the growth of the space in the United States.
Yellen stated that whenever possible, crypto laws should be “technology-independent”:
“For example, consumers, investors and businesses must be protected from fraud and misrepresentation, regardless of whether assets are stored on a balance sheet or distributed ledger. Similarly, firms that hold customer assets must ensure that these assets are not lost, stolen, or used without the customer’s consent.”
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, KoinFinans and the author of this content cannot be held responsible for personal investment decisions.