Regulation
Janet Yellen Says Treasury Not Responsible for SEC-CFTC ‘Quarterbacking’ Over Cryptocurrency Rules
Secretary of the Treasury of the United States My Janet Yellen said Treasury is not responsible for the “quarterbacking” between the CFTC and the SEC over their opposing positions on cryptocurrency regulation.
Yellen made the statement during a meeting on July 9 hearing before the House Financial Services Committee.
Opposing positions
House Financial Services Committee Chairman French Hill said the SEC and CFTC have taken opposing legal positions in federal court on cryptocurrencies and asked whether Treasury’s Financial Stability Oversight Council (FSOC) is working to merge the two regulators.
Hill said the board “should be the quarterback for financial risk.” However, Yellen disagreed, saying:
“It is not the role of the Financial Stability Supervisory Board to comment on this matter.”
He noted that the Treasury has published a report on the risks of cryptocurrencies, partly addressing the risks arising from the lack of agreement among regulators.
Earlier in her testimony, Yellen told Hill that she remains committed to achieving a regulatory framework for digital assets and hopes the efforts “come to a good conclusion.”
Concentrated Risk, Russian Stablecoins
Yellen also answered other crypto-related questions. Representative Mike Flood asked Yellen whether decentralized trading protocols require a different approach to regulation than centralized services.
Yellen responded that the SEC and CFTC are looking into the matter and added that some issues “may also fall under the regulatory umbrella of the banking agencies.”
Flood also questioned whether SEC regulation could reduce custody options for cryptocurrencies. He asked Yellen whether a limited number of approved custodians available to registered investment advisors (RIAs) for Bitcoin ETFs would introduce concentrated risk.
The Treasury secretary responded that the trend could pose a “potential” risk, but declined to say for sure without further detail.
Member of Congress Dr. Brad Sherman commented on the Russian central bank’s plans to circumvent Western sanctions with cryptocurrencies. Yellen said the Treasury is “very careful” about the use of cryptocurrencies and stablecoins, but she does not believe Russia’s activities are material.