By Brenda Collins
A report from the United States government says that U.S. Treasury Secretary Janet Yellen has called for a “tougher regulatory framework” for cryptocurrencies, citing concerns about their use in illicit activities and potential threats to financial stability.
Yellen said that cryptocurrencies could potentially increase financial inclusion and efficiency, but they pose serious risks if left unregulated. She said this when addressing the President’s Working Group on Financial Markets virtual meeting. Yellen said, “we need to address the growing problem of the misuse of cryptocurrency for illegal activity.” She added that “we also need to ensure that these assets are not used to finance terrorism or other illegal activities.”
Cryptocurrency analysts familiar with government policies, when contacted said that timing of Yellen’s remarks coincides with a rise in interest in and investment in the cryptocurrency market, with Bitcoin reaching record highs recently. However, concerns about the possibility of fraud and market manipulation have been raised due to the absence of clear regulations.
Also read:The Relevance of a Tougher Regulatory Framework
According to the report, Yellen continued by requesting that the working group look into methods to develop a regulatory framework that balances investor protection and innovation. She added, “we need to ensure that our regulatory system is agile and responsive to emerging technologies and hazards,” while elaborating on this.
She continued by saying that the nation should be aware of the possibility of regulatory arbitrage, in which bad actors could exploit systemic flaws to engage in illegal activities. Meanwhile, the Bitcoin community had a variety of reactions to Yellen’s remarks.
Some who supported the push for more transparent regulations contended that doing so would help legitimate the sector and safeguard investors. Others, on the other hand, criticized the idea, claiming that it would inhibit innovation and impede market expansion.
In the upcoming months, it is anticipated that the President’s Working Group on Financial Markets will continue to look into measures to regulate the cryptocurrency market. Yellen’s demand for a “tougher regulatory framework” indicates that the American government is actively influencing the direction of the sector.
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