Yellen issues statement on cryptocurrency regulatory stance and risk considerations

In the wave of digital currency, the role and responsibilities of regulatory agencies have increasingly become the focus of public attention. In the face of growing regulatory disagreements and potential financial risks in the cryptocurrency field, U.S. Treasury Secretary Janet Yellen issued a statement at a hearing of the House Financial Services Committee on July 9.

Secretary Yellen emphasized that although the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) have opposing positions on cryptocurrency regulation, the Treasury Department does not assume the responsibility for "coordination" between the two. In addition, she responded to concerns about concentration risks and concerns that Russia could use cryptocurrencies and stablecoins to circumvent U.S. sanctions.

Divisions among regulators

During a hearing before the House Financial Services Committee, committee chairman French Hill said the SEC and CFTC have taken opposing legal positions in federal courts regarding cryptocurrency regulation. On this issue, the Financial Stability Oversight Council (FSOC) of the Ministry of Finance was asked whether it has plans to coordinate the two agencies to unify the stance of regulatory policies.

Hill emphasized that FSOC, as a financial regulator, has the responsibility to control and manage financial risks.

However, Secretary Yellen has a different view. She made it clear that the FSOC’s role does not include adjudicating regulatory differences between the SEC and the CFTC.

Yellen further explained that the Treasury Department has released a report on cryptocurrency risks, which to some extent mitigates risks arising from a lack of consensus among regulators.

It is reported that in the early stages of the hearing, Yellen assured Hill that she would continue to work on building a comprehensive regulatory framework for digital assets. She expressed her expectation that this effort will eventually achieve positive results, while also emphasizing the importance of a regulatory framework to ensure the healthy development of the cryptocurrency market and the stability of the financial system.

Centralization risks and international sanctions issues

During a House Financial Services Committee hearing, Treasury Secretary Janet Yellen answered a series of in-depth questions about cryptocurrencies.

Congressman Mike Flood raised questions about the regulation of decentralized exchange protocols, asking whether these protocols should be treated differently from centralized services. Yellen responded that the SEC and CFTC are actively studying this issue, and pointed out that in addition to these two committees, banking regulators may also need to participate in relevant regulatory work.

Flood further raised a regulatory issue regarding Bitcoin exchange-traded funds (ETFs). He is concerned about whether there will be concentration risk if Registered Investment Advisers (RIAs) have a limited number of Bitcoin ETF custodians to choose from. Yellen admitted that this trend of centralization did have potential risks, but she did not make a clear judgment due to the lack of more detailed information.

Additionally, Congressman Brad Sherman raised questions about Russia’s use of cryptocurrencies to circumvent Western sanctions. Yellen said that the Treasury Department maintains a high profile on the use of cryptocurrencies and stablecoins, but based on the current situation, she does not believe that Russia’s activities in this area are particularly large-scale. Yellen’s statement shows the U.S. government’s vigilance and prudent attitude in monitoring and responding to the international risks that cryptocurrency may bring.

Through these questions and answers, we can see the U.S. government’s complex considerations in cryptocurrency regulation and its efforts to find a balance between maintaining financial security and promoting technological innovation. Yellen's response also reflects the Treasury Department's active actions in this field and its close attention to the international situation.

Conclusion:

During the hearing of the House Financial Services Committee, Secretary Janet Yellen’s speech reflected the U.S. government’s prudence and thoughtfulness on cryptocurrency regulation. She provides clear responses and attention to the divergences that exist among regulators, the potential for concentration of risk, and the complexities of circumvention of international sanctions. Yellen's statement not only provides guidance for the regulatory direction of the cryptocurrency market, but also emphasizes the importance of seeking a balance between financial innovation and risk management.

As cryptocurrency technology continues to evolve, ensuring a robust and transparent regulatory environment is particularly critical. This is not only related to the healthy development of the market, but also an important component of global financial stability and national security. The U.S. government’s efforts in this area indicate that a more coordinated regulatory strategy may be formed in the future to address the challenges and opportunities brought by cryptocurrency.

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