Yellen says U.S. crypto rules should support innovation, manage risks

A representation of the virtual cryptocurrency Bitcoin is seen in this illustration taken on October 19, 2021. REUTERS/Edgar Su

WASHINGTON, April 7 (Reuters) - U.S. Treasury Secretary Janet Yellen said on Thursday that crypto asset regulations should support responsible innovation while managing risks, sticking to the contours of a recent executive order. from the White House that was well received by the crypto market.

In a speech on digital asset policy released by Treasury, Yellen said that in many cases, regulators already have authorities in place that can manage the risks of cryptocurrencies and provide adequate oversight of new types of intermediaries, such as brokers. digital asset exchanges.

"Our regulatory frameworks must be designed to support responsible innovation while managing risks, especially those that could disrupt the financial system and the economy," Yellen said in excerpts from her speech at American University in Washington.

"As 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," he said.

Cryptocurrency regulation remains patchy and regulators are still searching for the best way to oversee cryptocurrency trading platforms and services provided by banks, such as digital asset custody.

Some lawmakers want regulators to crack down on the industry due to volatility in crypto asset valuations, raising some concerns in the market about the onerous new rules. But the message from the White House and Treasury about supporting responsible innovation has allayed some of those fears.

Biden's executive order requires the Treasury and Commerce Departments and other agencies to prepare reports on "the future of money" and the role cryptocurrencies will play. Read more

Yellen also said that, wherever possible, crypto regulations should be “technology neutral” and guided by the risks associated with the services provided to households and businesses, not the underlying technology.

"For example, consumers, investors and businesses must be protected from fraud and misleading statements, regardless of whether assets are stored on a balance sheet or a distributed ledger," Yellen said. "Similarly, companies that hold customer assets should be required to ensure that those assets are not lost, stolen or used without the customer's permission."

Information from David Lawder; Edited by Sam Holmes

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