US Treasury Secretary Urges Federal Regulator for Stablecoins

Janet Yellen, the United States Secretary of the Treasury, has urged Congress to address the gaps in digital asset regulation that could potentially pose risks to investors and the financial system. Speaking during a hearing on the Financial Stability Oversight Council annual report, Yellen was questioned by House Financial Services Committee chair Patrick McHenry about her views on legislation concerning stablecoins and regulatory clarity in the crypto space. Yellen emphasized the importance of regulation in certain areas, such as protecting users of digital wallets and overseeing stablecoin issuers.

According to Yellen, while there are clear regulatory authorities in place for certain aspects of digital assets, there are still gaps that need to be filled in order to ensure consumer protection and address risks to financial stability. She highlighted a specific gap in the regulatory authority of the Commodity Futures Trading Commission (CFTC) over spot market commodities related to Bitcoin. Yellen also expressed concerns about the risks posed by stablecoins to the U.S. financial system and advocated for a federal regulatory framework that applies to all U.S. states, rather than the current state-by-state approach.

Yellen’s remarks echo her previous statements calling for a comprehensive regulatory framework for cryptocurrencies in the United States. In July 2023, the House Financial Services Committee passed two bills aimed at addressing digital asset regulation: the Financial Innovation and Technology for the 21st Century Act and the Clarity for Payment Stablecoins Act. Both bills are currently awaiting a full floor vote in the House.

Representative McHenry, who has chaired the House Financial Services Committee since January 2023, has announced that he will not seek reelection and will leave office in 2025. The potential impact of his departure on digital asset regulation remains uncertain.