US Treasury Secretary Janet Yellen listed stablecoins as a top policy concern in the digital asset space for regulators, currently subject to "inconsistent and fragmented oversight."
Speaking to attendees at the American University in Washington, DC on Thursday, Yellen said the Treasury Department was working with Congress to promote legislation to help ensure "stablecoins are risk-resistant" for consumers and the U.S. financial system. According to the Secretary of the Treasury, while stablecoins As stablecoins raised โpolicy concernsโ and issues around the reserve assets of coins, many parts of the digital asset space present potential risks that could exacerbate inequality.
โOur regulatory frameworks must be designed to support responsible innovation while managing risks and especially those that could disrupt the financial system and the economy,โ said Yellen. โAs banks and other traditional financial firms become more involved in digital asset markets, regulatory frameworks will need to adequately reflect the risks of these new activities. And new types of intermediaries, such as digital asset exchanges and other digital native intermediaries, must be subject to appropriate forms of supervision.โ
Yellen cited a report from the President's Task Force on Financial Markets published in November, which suggested that stablecoin issuers should be subject to โadequate federal supervisionโ similar to that of traditional banks. He also raised concerns about the Federal Reserve's issuance of a US central bank digital currency, saying the project would likely present a "major design and engineering challenge" that could take "years to develop." .
"I share the president's urgency to push for research to understand the challenges and opportunities that a CBDC could present to American interests," Yellen said.
Addressing the regulatory challenges posed by digital assets appears to be a key policy issue for US President Joe Biden, who in March signed an executive order to study the implementation of a comprehensive regulatory framework for cryptocurrencies. Yellen said the Treasury Department would work with the White House and other government agencies over the next six months to "produce critical reports" related to policy recommendations to mitigate consumer and systemic risks around digital assets.
Related: The Treasury will launch a financial education initiative around investments in cryptocurrencies
The Treasury Secretary's speech came after a Wednesday appearance on House Financial Services Committee, in which he testified that the department had seen no significant cases of Russian individuals and entities named in recent sanctions using cryptocurrencies to circumvent financial restrictions. The Treasury Department's Office of Foreign Assets Control announced on Tuesday that it would impose sanctions on the Garantex virtual currency exchange and the Hydra darknet market.
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