US crypto regulations should be ‘tech neutral,’ says Janet Yellen

The U.S. Treasury secretary Janet Yellen highlighted the need for new cryptocurrency-focused regulatory frameworks “designed to support responsible innovation while managing risks” in her remarks during an April 7 speech at American University.

According to a report published by Associated Press, this was Yellen’s first crypto-related speech since President Joe Biden signed an executive order on digital assets on March 10.

“Our regulatory frameworks should be designed to support responsible innovation while managing risks — especially those that could disrupt the financial system and economy,”

Yellen noted, adding: 

“As banks and other traditional financial firms become more involved in digital asset markets, regulatory frameworks will need to appropriately reflect the risks of these new activities…To the extent there are gaps, we will make policy recommendations, including assessment of potential regulatory actions and legislative changes.”

Equal protection regardless of medium

As CryptoSlate reported, Biden’s “Executive Order on Ensuring Responsible Development of Digital Assets” has delineated several key directions for crypto regulation, including customer protection, systemic financial and security risk mitigation, equitable access to financial services, support for technological advancements, and others.

In her speech, Yellen similarly echoed a lot of those points. Notably, she also opined that potential crypto regulations should be “tech neutral” — meaning that consumers of various financial products must be protected equally, regardless of whether their assets are physical or digital.

“Consumers, investors, and businesses should be protected from fraud and misleading statements regardless of whether assets are stored on a balance sheet or distributed ledger. Similarly, firms that hold customer assets should be required to ensure those assets are not lost, stolen, or used without the customer’s permission.”

Despite the mostly positive and constructive tone of her speech, however, Yellen has recently also stated that she has some concerns when it comes to the mass adoption of crypto. On March 25, during CNBC’s Squawk Box with Andrew Sorkin, she pointed out that apart from various benefits, cryptocurrencies can also be used for illicit activity:

“I think there are valid concerns around it. Some have to do with financial stability, consumer and investor protection, use for illicit transactions, and other things. On the other hand, there are also benefits from crypto.”