The US Treasury Secretary has stated that cryptocurrencies need to be regulated beyond existing securities laws.
US Treasury Secretary Janet Yellen shared her thoughts on legislative discussions surrounding cryptocurrencies.
On February 6th, speaking at a session organized by the House Financial Services Committee, Yellen emphasized that cryptocurrencies should be subject to regulation outside of securities laws. Yellen stated,
“The FSOC is focused on digital assets and related risks … Applicable rules and regulations should be enforced, and Congress should pass legislation to provide for the regulation of stablecoins and of the spot market for crypto assets that are not securities.”
Yellen identified the risks in crypto asset services and stablecoins as unexpected withdrawals, vulnerabilities due to price fluctuations in cryptocurrencies, and unregulated crypto platforms.
These remarks partially respond to a letter from four Republican lawmakers dated February 6th, requesting additional information from the FSOC. The letter queries FSOC’s stance on not classifying assets like Bitcoin (BTC) and Ethereum (ETH) as securities and suggests that the Commodity Futures Trading Committee (CFTC)’s authority should be expanded to oversee the spot markets of non-security crypto assets, expecting a response by February 20th.
Republicans and FSOC Seek New Path for Digital Assets
Republican legislative members and House Representatives Patrick McHenry, Glenn Thompson, French Hill, and Dusty Johnson, who signed the letter to US Treasury Secretary Janet Yellen, acknowledged that the FSOC has identified regulatory gaps concerning digital assets not considered as securities. Despite recognizing these gaps, the legislative members noted that FSOC has fallen short of creating a framework that promotes digital asset innovation while ensuring consumer protection.
The Republican legislative members support the Financial Innovation and Technology Act for the 21st Century (FIT21), which assigns clear roles to federal regulators and provides consumer protections. Despite being penned by Republican members, FIT21 passed the committee in middle of 2023 with bipartisan support. This bill is notably supported by Coinbase CEO Brian Armstrong and the Blockchain Association.