Janet Yellen, the head of the US Treasury Department, has emphasized the importance of regulating cryptocurrencies but has clarified that a complete ban on the crypto industry is not being considered by Washington
"We are not proposing a complete ban on crypto activities, but it is very important to create a strong regulatory framework … We are working with other governments,"Janet Yellen said in an interview with Reuters.
In an interview with Reuters, Yellen stated that creating a strong regulatory framework is essential. Yellen's comments come after cryptocurrency regulation was discussed at the Indian-led G20 meeting, where India's finance minister proposed that regulatory measures for cryptocurrencies should be fixed at the level of G20 member countries.
The initiative was later supported by the International Monetary Fund and the US Treasury. IMF Managing Director Kristalina Georgieva has also stated that the organization is in favor of adequate regulation of digital assets and is against a complete ban on cryptocurrencies.
Earlier this year, Yellen expressed concern about the use of cryptocurrencies in illicit activities such as money laundering and terrorism financing. She also called for regulating stablecoins, which are cryptocurrencies pegged to a fiat currency or commodity to reduce volatility.
Yellen believes that stablecoins should be subject to the same regulatory framework as traditional banks, and that they pose risks to the financial system if they are not properly regulated.
"We need to make sure that our regulatory framework is up to the task of dealing with the new challenges posed by stablecoins,"
Yellen said in a statement.
The US Treasury has been actively working on a regulatory framework for cryptocurrencies. In November 2021, the Treasury Department's Financial Crimes Enforcement Network (FinCEN) proposed new rules that would require cryptocurrency exchanges and custodians to collect and report information about transactions over $10,000.
The proposed rules would also require reporting of transactions that involve self-hosted wallets, which are wallets that are not held by a third-party service provider.
Cryptocurrency advocates have criticized the proposed rules, saying they would be difficult to implement and could stifle innovation in the crypto industry. However, Yellen has defended the rules, saying they are necessary to prevent illicit activity and protect the integrity of the financial system.
In addition to stablecoins, Yellen has also expressed concern about the rise of decentralized finance (DeFi), which is a form of finance that operates on blockchain technology and is not subject to traditional financial regulations.
Overall, the US Treasury Secretary's comments suggest that the US government is committed to regulating cryptocurrencies in a way that protects investors and prevents illicit activity, while also allowing for innovation in the crypto industry.