Treasury Secretary says ‘our regulatory frameworks should be designed to support responsible innovation while managing risks.’
U.S. Treasury Secretary Janet Yellen called for “responsible innovation” in the development of digital assets in her first remarks following President Joe Biden’s executive order on cryptocurrency.
“Our regulatory frameworks should be designed to support responsible innovation while managing risks,” Yellen said in prepared remarks on April. “Especially those that could disrupt the financial system and economy.”
Yellen’s comments came one day after cryptocurrency prices tumbled following the release of hawkish minutes from the Federal Reserve’s March policy meeting.
Crypto prices were down on April 7, with bitcoin down slightly to $43,651, according to CoinGecko.
“Taxpayers should receive the same type of tax reporting on digital asset transactions that they receive for transactions in stocks and bonds, so that they have the information they need to report their income to the IRS,” Yellen said.
What Biden’s Order Means
Last month, Biden signed an executive order on cryptocurrency.
Among other things, the order directs Treasury and other departments to come up with policy recommendations “to address the implications of the growing digital asset sector and changes in financial markets for consumers, investors, businesses, and equitable economic growth.”
Cryptocurrency scams have been making headlines, including an incident earlier this year when a New York couple was arrested for allegedly conspiring to launder about $4.5 billion in cryptocurrency stolen during the 2016 hack of the virtual currency exchange Bitfinex.
“Under the Executive Order, we will work to make sure consumers, investors, and businesses have adequate protections from fraud and theft, privacy and data breaches, and unfair and abusive practices,” Yellen said.
‘Wide Range of Views’
Yellen was also thoughtful about how cryptocurrency opinions vary, and why the government is paying close attention to the sector.
“People have a wide range of views when it comes to digital assets,” Yellen said. “On one hand, some proponents speak as if the technology is so radically and beneficially transformative that the government should step back completely and let innovation take its course.”
On the other hand, she added that the area has its bears.
“Skeptics see limited, if any, value in this technology and associated products and advocate that the government take a much more restrictive approach,” Yellen said.
“Such divergence of perspectives has often been associated with new and transformative technologies,” she added.
Social Media Digests Yellen’s Crypto Comments
People took to social media to comment on Yellen’s remarks.
Jake Chervinsky, head of policy for the Blockchain Association, tweeted that “Secretary Yellen gave a speech on crypto today & it was . . . really good!”
“She showed a nuanced understanding of the benefits & risks of responsible innovation, affirmed a tech-neutral approach to regulation, & clearly isn’t trying to rush hasty new rules (like some others are),” Chervinsky said.
There were negative responses as well, including one person who tweeted a video clip of Steve Carrell from “The Office” closing the door on an elderly man with subtitle “OK, Boomer.”
“AKA we wanna get our grubby government hands on your crypto money too,” another person tweeted.
Jack McDonald, CEO of Standard Custody, said “Yellen’s comments were expected – ensuring a regulatory framework that promotes responsible innovation and manages risk.”
“Where I am concerned is applying traditional financial market regulations to digital assets,” he said. “Fundamentally, it’s a different system that needs tailored regulation.”
‘One Size Does Not Fit All’
Regulating digital assets the same way the US has regulated traditional financial institutions overlooks their basic fundamental differences, McDonald said, nothing that “one size does not fit all and ‘tech neutral’ does not exist.”
Edward Moya, senior market analyst for the Americas with Oanda, said Yellen’s comments “were focused on providing more regulation to reduce fraud and provide more protections for the consumer.”
“The cryptoverse will get taxed going forward and that could prove to slow down some of the explosive retail growth this market was getting used to over the years,” Moya said.
“Overall, her comments should help foster long-term growth for the crypto market and it seems they will be stuck in the exploratory phase for a while on how to best regulate the space,” he said.
Keegan Francis, bitcoin and crypto specialist, Finder, noted that the “innovation” Yellen spoke about bringing to the U.S. financial system is not innovation, “but the same abilities wrapped in new technology.”
“As Secretary Yellen rightfully pointed out, Satoshi Nakamoto introduced bitcoin in 2008 to be a decentralized form of money,” he said. “What she doesn’t say is that the innovation removes human error from the system.”
“This is the point that advocates of bitcoin are trying to make the world see,” he continued. “We don’t need another sovereign money. We need self-sovereign money, free from central control and manipulation.”
Francis said that “every fiat money system in history has collapsed due to inflation with the exception of those that have yet to collapse today.”
“But what we are seeing is every warning sign that this collapse is coming near,” he said. “For me, this is the single most important financial topic that we need to be focusing on but aren’t.”
