Calls continue in the US for the cryptocurrency sector to be regulated after Treasury Secretary Janet Yellen called on regulators to toughen their stance.
Yellen spoke in front of the House Financial Services Committee on her belief that regulations surrounding the crypto sector, in particular stablecoins, must fall under the country’s remit sooner rather than later.
Of particular focus for Yellen was stablecoins as she believes that financial regulators must enact some level of federal regulation over issuers of the digital currency.
Yellen commented: “It’s critical for there to be a federal regulatory floor that would apply to all states and that a federal regulator should have the ability to decide if a stablecoin issuer should be barred from issuing such an asset.”
The launch of PayPal’s native stablecoin PYUSD last year raised concerns from government officials such as Maxine Waters, who believe that the popularity of the payment company could boost the stablecoin’s usage and in turn, create financial instability.
Republican opposition has called on further action for regulatory oversight on stablecoins in the past and whilst Yellen and other Democratic lawmakers have maintained a line of federal caution.
Despite this approach, the Democratic approved support for a proposed stablecoin legislative bill that was headed by Committee Chairman Patrick McHenry, although it is yet to be addressed in the House.
Prior to speaking before the House yesterday, Yellen had mentioned in her testimony on Monday of the risks of stablecoins, as well as other cryptocurrencies, on the detrimental impact they pose to the financial health of the US system.
Yellen stated: “The council is focused on digital assets and related risks such as from runs on crypto-asset platforms and stablecoins, potential vulnerabilities from crypto-asset price volatility, and the proliferation of platforms acting outside of or out of compliance with applicable laws and regulations.
“Applicable rules and regulations should be enforced, and Congress should pass legislation to provide for the regulation of stablecoins and of the spot market for crypto-assets that are not securities.”