Janet Yellen Highlights Benefits of ‘Responsible’ Crypto Innovation

The buzz around crypto regulations has increased significantly in the past few months. With a market cap of almost $2 trillion, digital assets are gaining popularity among retail and institutional investors around the world. In the US, authorities are working on a comprehensive crypto regulatory framework to support innovation.

Janet Yellen, the Secretary of the Treasury, believes that the crypto regulatory frameworks should be based on risks and activities. She added that there are several benefits of responsible innovation in the crypto sector.

“Wherever possible, regulation should be 'tech neutral'. For example, consumers, investors and businesses should be protected from fraud and misleading statements regardless of whether assets are stored on a balance sheet or distributed ledger. Similarly, firms that hold customer assets should be required to ensure those assets are not lost, stolen or used without the customer’s permission,” Yellen said.

Yellen has been a supporter of innovative technologies in the financial services sector. However, the former Chair of the Federal Reserve, has criticized Bitcoin and other digital currencies in the past. In February 2021, Yellen said that the use of digital currencies in illegal activities has been a major problem. During that time, Yellen noted that some people have used digital assets for money laundering in the past.

Digital Assets

According to Yellen, crypto regulations must ‘evolve’ to meet the growing opportunities in the digital world. “We are not navigating without a compass. Digital assets may be new, but many of the issues and opportunities they present are not. A thoughtful and pragmatic policy can be part of this emerging innovation,” she added.

Earlier this year, President Joe Biden signed an executive order on crypto assets and asked the Treasury, Commerce Departments and other relevant agencies to prepare reports on the role of cryptocurrencies in the financial system.