During a recent speech at American University, Treasury Secretary Janet Yellen signaled the US government’s belief that cryptocurrencies are not going anywhere – in other words, here to stay – and she called for more regulation around the emerging technology. In her first speech since President Biden’s Executive Order in March in which he called for a broad review of digital assets, including cryptocurrencies, Yellen said that more government regulation is needed to protect consumers, investors and businesses from fraud.
Here below is what she outlined as broad areas of concern. But if you are a crypto investor. Or if you are thinking creatively about how crypto might be beneficial or could be used in some way to advance your business, do her ‘5 points of focus’ really tell you anything? Any clarity, any value? Or just ‘government-speak mumbo jumbo?’ Moreover, you along with many others may suspect that this is all a ‘cover’ for more government regulation, more intrusive monitoring of private commercial transactions and less freedom for capital to be a creative and positive force. Please take a close look and let us know if you think there are any signs of hope in these points that she highlights.
Yellen outlines five lessons she believes apply to Treasury’s approach to cryptocurrencies:
1.The financial system benefits from “responsible innovation”
2.Vulnerable individuals are susceptible to harm if regulation does not keep up with innovation
3.Whenever possible, regulation should be “tech neutral”, instead focusing on activities and their risks
4.Sovereign money is the core of a well-functioning financial system
5.Responsible innovation will involve the collective efforts of policymakers, businesspeople, advocates, scholars, inventors and citizens.
While Yellen’s speech was short on detail as to how the government may ultimately regulate cryptocurrencies or whether it will introduce a central bank digital currency (CBDC), her remarks are a likely signal that the government intends to pursue a strategy of incorporating cryptocurrencies into the existing financial system. The coming months and years will ultimately reveal how the government intends to implement these guardrails or whether they will issue a CBDC, but for now, crypto investors, advocates and enthusiasts are left to “hurry up and wait” to see how it all plays out. But, when the government bureaucrats get involved, it’s time to hold on to your wallets, and in this case, crypto wallets especially.