Emphasis on the need for regulation at the federal level
U.S. Treasury Secretary Janet Yellen attended a hearing of the U.S. House of Representatives Financial Services Committee on the 6th and urged Congress to enact legislation to regulate crypto assets (virtual currencies) stablecoins at the federal level.
Yellen said the U.S. Financial Regulators Council (FSOC) is keeping a close eye on the risks of cryptocurrencies, as well as cybersecurity and the use of artificial intelligence (AI) in the financial industry.
“Congress should pass legislation to provide for the regulation of stablecoins and of the spot market for crypto-assets that are not securities” pic.twitter.com/Z7IqvcLNSt
— Taylor Barr (@taylorjbarr) February 6, 2024
He pointed out risks such as the high volatility of virtual currencies, the existence of platforms that do not comply with the law, and bank runs, and said that he would like to work with Congress to regulate the physical market of virtual currencies that are not stablecoins or securities. talked.
It states that basic regulations at the federal level that can be applied to all states are needed, giving federal authorities the ability to determine whether a token issuer can issue stablecoins or not. Yellen called for the following:
FSOC and the President’s Task Force on Financial Markets recognize that the risks that stablecoins pose to the financial system can grow over time.
We greatly welcome Congress’ efforts to develop an appropriate regulatory framework to address these risks.
What is a stablecoin?
Refers to a virtual currency whose price is always stable. Stablecoins are a type of crypto asset that, unlike volatile assets such as BTC, ETH, and XRP, are backed by currencies such as the US dollar and aim to maintain their value. In addition to stable coins backed by the US dollar (USDT/USDC), there are also stable coins that use algorithms.
▶️Virtual currency glossary
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Nonpartisan stablecoins are stagnant
Following Yellen’s remarks, Financial Services Chairman Patrick McHenry noted that two bills are currently being proposed in Congress, including a bipartisan stablecoin bill.
Although the “Bill Concerning Clarification of Payment Stablecoins” passed the Financial Services Committee, a vote in the full chamber is not scheduled due to confusing debate between the Democratic Party and the Republican Party.
The bill has drawn criticism from Democrats for leaving too much power to state-level authorities and limiting the Fed’s powers. Yellen also emphasized the need for federal regulations that apply to all states.
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The other, the Financial Innovation and Technology for the 21st Century Act, clarifies virtual currency regulations and also defines the division of roles between the U.S. Securities and Exchange Commission (SEC) and the U.S. Commodity Futures Trading Commission (CFTC). It’s included.
This bill also passed the House Financial Services Committee, but it lacks widespread support and there are no prospects for it to be debated in Congress yet.
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