Alex Dovbnya
Treasury Secretary Janet Yellen called on Congress to quickly enact new legislation to oversee digital asset markets
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Treasury Secretary Janet Yellen investigated Powerful call For Congress to enact legislation aimed at regulating the cryptocurrency market.
The urgency of this call comes in the wake of the collapse of the FTX cryptocurrency exchange, which exposed serious vulnerabilities in the digital asset space.
Addressing the regulatory vacuum
Gaps in digital asset regulation were highlighted, with Secretary Yellen stressing the need for clear legal frameworks governing the spot market for digital assets not classified as securities.
Its push for the legislation comes alongside repeated warnings about a lack of oversight in digital asset markets.
The proposed Financial Innovation and Technology Act aims to provide federal regulators with formal oversight of digital asset markets and seeks to address the lack of clear regulatory structures currently impacting the industry.
The 2022 Financial Stability Oversight Committee report highlighted the lack of direct supervision, the potential for regulatory arbitrage, and inadequate market structures under current laws as areas of significant concern.
This legislation will not only clarify the treatment of digital assets, but will also strengthen customer protections and disclosures, aligning them more closely with existing financial regulatory regimes.
Stablecoin risks
Secretary Yellen stated in her testimony that stablecoins, in particular, pose risks to the financial system that require a well-defined regulatory approach.
In her address to lawmakers, Yellen emphasized that the federal regulator should have the authority to block certain entities from issuing stablecoins, and sought to create a regulatory “floor” that would standardize compliance across all states.
Despite bipartisan tensions, progress has been made on a stablecoin regulation bill, albeit awaiting a House vote.
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Alex Dovbnya
