Yellen Highlights “Significant Opportunities” as the Treasury Shares Crypto Advice
The US Treasury Department released three new papers on the digital assets industry today, addressing issues and future regulatory intentions.
Following President Biden’s executive order on “Ensuring Responsible Development of Digital Assets,” the US Treasury Department has released three studies on digital assets.
Treasury Secretary Janet Yellen issued a statement in response to the revelations, stating that digital assets may present “huge possibilities” as well as “major threats.”
The studies discussed the future of money and payments, the possible impact of digital asset growth on customers and businesses, and measures to combat cryptocurrency-related criminality. While there are hazards associated with digital assets, Treasury Secretary Janet Yellen stated that there may be “substantial potential.”
Treasury Disseminates Crypto Reports
Six months after President Biden issued an executive order titled “Ensuring Responsible Development of Digital Assets,” the Treasury has released three studies outlining how regulators should govern the industry.
The White House’s finance department released thorough roundups on three crypto-related subjects, including the future of money and payments, the impact on consumers and businesses, and efforts to combat financial crime. The subjects covered were generally similar to those covered in the White House’s crypto regulatory framework, which was also released today.
Treasury Secretary Janet Yellen praised the promise of digital assets in a statement releasing the three assessments, while also recognizing the hazards. “The papers clearly address the true issues and hazards associated with digital assets employed in financial services,” she added.
On the other hand, if these hazards are managed, digital assets and other developing technologies might bring considerable potential.”
Government Suggestions for NFT Applications
The guide to the future of money and payments addressed various designs for a Central Bank Digital Currency, noting that a digital dollar might provide benefits such as speedier transactions and finality, as well as the capacity to handle cross-border payments. It also recommended the Fed to continue its CBDC studies. Furthermore, the study emphasized the need for the United States to encourage “responsible payments innovations,” implying that a new framework may be required to assist non-bank enterprises.
The Treasury highlighted possible dangers in its study on the potential consequences of digital assets for consumers and companies. There were three types of hazards: conduct risks (such as fraud), operational risks (such as software faults), and intermediation risks (such as a crypto custodian going insolvent). It also mentioned some of the possible applications for NFTs, such as tokenizing real estate titles, paying music and film royalties on the blockchain, and authenticating the authenticity of commodities. It also stated that NFTs can represent membership tokens or tickets, but that “many of the potential use cases are still materializing, in part due to the evolving technological and legal landscape, including licensing, contracts, copyright and proprietary information, anti-money laundering, and data security.”
The third report addressed the issue of cybercrime in the digital asset market. It emphasized possible dangers such money laundering, disintermediation, and terrorist funding, as well as a list of urgent activities for the government to do. These efforts include initiatives to monitor new threats more closely, increase anti-money laundering legislation enforcement, and penalize cybercriminals through actions like as seizures, criminal prosecutions, civil enforcement, and targeted sanctions. “Mixing services, darknet markets, and noncompliant VASPs used to launder or pay out illegal monies into fiat currency are of particular concern,” it added. The Treasury controversially banned the privacy protocol Tornado Cash and its smart contracts this month, much to the chagrin of the cryptocurrency industry; Coinbase is sponsoring a lawsuit against the government agency in response to the sanctions.
While the Treasury has previously remarked on cryptocurrency and recently stepped in to prohibit Tornado Cash, today’s publications provide a thorough look at how the agency intends to manage the space. Yellen’s comments demonstrate that, while the Treasury is cautious about crypto owing to the dangers, it is not ready to discard the technology entirely.