US Treasury Secretary calls for federal regulator to oversee stablecoins

Janet Yellen, United States Secretary of the Treasury, told lawmakers Congress should address gaps in digital asset regulation, some of which could present risks to either investors or the financial system.

In a Feb. 6 hearing over the Financial Stability Oversight Council annual report, House Financial Services Committee chair Patrick McHenry questioned Yellen about her views on pending legislation aimed at addressing stablecoins and regulatory clarity of the crypto space. The Treasury Secretary called regulation “critical” for certain areas, including protecting wallet holders and overseeing stablecoin issuers.

“There are many areas with respect to digital assets where we do have clear regulatory authority, but we’ve identified some gaps where, for consumer investor protection and to address financial stability risk, it would be useful for Congress to take action to fill those gaps,” said Yellen.

The Treasury Secretary pointed to the Commodity Futures Trading Commission (CFTC), saying it had no “supervisory regulatory authority” over spot market commodities related to Bitcoin (BTC). She claimed that stablecoins posed risks to the U.S. financial system, pushing for a “federal regulatory floor” applicable to all U.S. states rather than the current state-by-state approach.

“A federal regulator should have the ability to decide if a stablecoin issuer should be barred from issuing such an asset.”

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Yellen’s remarks reiterated previous public comments by the Treasury Secretary in which she called for a robust regulatory framework to govern cryptocurrencies in the United States. The House Financial Services Committee passed the Financial Innovation and Technology for the 21st Century Act and the Clarity for Payment Stablecoins Act in July 2023. Both bills await a full floor vote in the House.

Representative McHenry, who has chaired the House Financial Services Committee since January 2023, is set to leave office in 2025 after announcing he did not plan to seek reelection. The impact his departure could have on digital asset regulation is unclear.

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