U.S. Treasury Secretary Janet Yellen has emphasized the need for “additional regulation” in order to safeguard consumers and investors from the inherent risks associated with the cryptocurrency industry. Yellen made this statement during an appearance on CNBC’s Squawk Box on June 7.
Yellen revealed that the Treasury Department has conducted comprehensive evaluations of the crypto sector in recent months as part of the President’s Executive Order, which identified various risks for consumers and investors. While she acknowledged that the existing regulatory framework, including oversight by authorities such as the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), is equipped to manage certain risks, she also acknowledged the presence of “holes in the system” that require new rules. Yellen expressed the intention to collaborate with Congress to enact additional regulation.
When asked about the recent SEC actions against Binance and Coinbase, two prominent cryptocurrency exchanges, for securities law violations, Yellen refrained from commenting on specific cases but deemed the supervisory agencies’ actions as appropriate. She voiced support for these agencies in utilizing the tools at their disposal to enforce regulations.
The current impasse between the crypto industry and the U.S. regulatory system necessitates a resolution that can only be achieved through regulatory certainty. The SEC’s actions against Coinbase, a company that underwent a U.S.-based initial public offering (IPO) while complying with regulatory requirements, coupled with its assertion that most major cryptocurrencies are effectively securities under existing laws, paints a somewhat pessimistic picture for the industry in the country.
Nevertheless, these cases are likely to contribute to the much-needed regulatory clarity that the crypto industry requires to flourish in the United States. Despite claims by U.S. regulators that current securities laws are adequate to regulate the industry, there are apparent inconsistencies in their approach to different cryptocurrencies. While it took regulators several years to determine the regulatory classification of Bitcoin, ultimately recognizing it as more of a commodity than a security, the status of nearly every other cryptocurrency remains a topic of ongoing debate. While Ethereum has not been classified as a security in the SEC’s cases against Binance and Coinbase, other top 10 projects such as Polygon and Cardano have been treated as securities.
In summary, Janet Yellen’s call for additional regulation, coupled with her support for supervisory agencies like the SEC, underscores the importance of addressing the risks and shortcomings within the crypto industry. The resolution of ongoing regulatory debates and the establishment of clear guidelines are essential for the industry’s sustainable growth and success in the United States.