Amid recent developments in the crypto industry, Janet Yellen, the Treasury Secretary and former chair of the U.S. Federal Reserve, has emphasized the need for stricter regulatory measures and has urged Congress to take action. Yellen's stance aligns with Treasury reports that have identified various risks associated with the rapidly expanding sector.
During an interview on CNBC's "Squawk Box" with Andrew Ross Sorkin, the discussion covered topics ranging from the debt ceiling to the state of the U.S. economy. However, the conversation also delved into digital currencies, particularly in light of recent lawsuits filed by the U.S. Securities and Exchange Commission against major platforms such as Binance and Coinbase. Yellen referenced Treasury reports that were commissioned as part of President Joe Biden's executive order on cryptocurrencies.
Yellen expressed a strong belief in the necessity of increased regulation within the crypto domain and encouraged Congress to play a proactive role in establishing appropriate policies. She stated, "We've identified a number of risks [with crypto]. I'm supportive of those agencies to use the tools they have," adding, "I see some holes in the system where additional regulation would be appropriate. We'd like to work with Congress to see additional regulation pass."
This is not the first time Yellen has advocated for stringent regulations in the cryptocurrency space. During a G20 meeting in February, she stressed the importance of establishing a robust regulatory framework. In November 2022, she referred to the collapse of FTX as a "Lehman moment" and highlighted the need for "adequate regulation" in the crypto industry. Yellen's recent comments in the interview with Sorkin follow SEC Chair Gary Gensler's appearance on CNBC the day before, where he stated, "we don't need more digital currency."
As the crypto industry continues to evolve and attract greater attention, the call for enhanced regulations becomes increasingly significant. Yellen's vocal support for increased oversight reflects the growing consensus that a well-defined regulatory framework is necessary to mitigate risks and foster a healthy and sustainable crypto ecosystem. It remains to be seen how Congress will respond to these calls and what shape future regulations in the crypto space will take.
