Janet Yellen Sounds Alarm on Crypto Risks in Congressional Testimony

In a forthcoming address to Congress, U.S. Treasury Secretary Janet Yellen is poised to underscore the myriad risks posed by the cryptocurrency industry to the financial system. According to excerpts from her testimony released on Monday, Yellen will highlight concerns ranging from the instability of stablecoins to the specter of market upheavals and price volatility.

Yellen is slated to appear before the House Financial Services Committee on Tuesday to provide insights into the ongoing efforts of the Financial Stability Oversight Council (FSOC), a body of U.S. financial regulators chaired by the secretary herself. The FSOC, charged with preempting future financial crises, has intensified its scrutiny of crypto-related risks in recent times, elevating them to a top-tier concern.

“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,” stated Yellen in her prepared remarks, as posted on the committee’s website.

Yellen Advocates for Regulatory Action

Yellen reiterated the imperative for robust regulatory measures to safeguard against these emerging risks. She emphasized the need for the enforcement of existing rules and called on Congress to enact legislation to regulate stablecoins and the spot market for non-security crypto-assets.

“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,” Yellen emphasized.

While Yellen’s statements do not signal any fresh policy directives, her continued emphasis on digital assets underscores the enduring significance of the crypto sector on the U.S. government’s financial agenda.