US Treasury Secretary Calls for Regulation of Stablecoins and Non-Security Assets
United States Treasury Secretary, Janet Yellen, has called for the US Congress to pass legislation regulating stablecoins and what she describes as “crypto assets that are not securities.”
Yellen’s call for legislation specifically targeting cryptocurrencies aims to address “gaps” in existing laws, which she claims makes thorough and effective regulation of crypto difficult.
Yellen Addresses FSOC, Calls Out Crypto Risks
Addressing the House Financial Services Oversight Committee (FSOC) on Tuesday, Yellen said existing laws don’t give regulators all the powers they need to effectively regulate crypto assets—particularly stablecoins and cryptocurrencies that are not designated as securities:
Congress should pass legislation to provide for the regulation of stablecoins, and of the spot market for crypto assets that are not securities.
Yellen said that without new legislation to close the gaps, digital assets would continue to present risks to the stability of the broader economy, citing ‘runs’ on crypto exchanges and stablecoin issuers as examples.
While conceding regulators, such as the SEC and CFTC, already have considerable powers to regulate crypto markets, Yellen noted that spot markets for non-security cryptocurrencies are a glaring example of markets currently beyond the reach of regulators:
The CFTC, for example, doesn’t have supervisory regulatory authority with respect to spot markets in commodities like Bitcoin”
In regard to stablecoins, Yellen has long insisted federal regulation is necessary to set minimum national standards on who can issue a stablecoin. Currently these standards are largely state-based. Federal legislation on this issue has been stalled for some time as Republicans favour a model maintaining state-based powers, while Democrats favour a federal model.
Prominent Crypto Lawyer Weighs In
Posting on X following the hearing, prominent crypto lawyer John E. Deaton speculated about which cryptocurrencies Yellen could be referring to when she mentioned “crypto assets that are not securities”.
Deaton’s list of non-security cryptocurrencies, that he believes could become the target of new legislation, included Bitcoin (BTC), Ethereum (ETH) and XRP (XRP)—although it should be noted that currently the only cryptocurrency that all relevant regulators agree is not a security is Bitcoin.
Deaton also suggests his readers should keep a close eye on the SEC’s ongoing case against Coinbase, as the outcome may result in more crypto assets being deemed non-securities.