April 8, 2022
By Sharan Kaur Phillora
US Treasury Secretary Janet Yellen says more government regulation is needed to police the proliferation of cryptocurrency and other digital assets and to ward off fraudulent and illicit transactions.
Here’s what we know
Yellen argued that it’s the government’s role to “support” and “ensure responsible innovation” by tweaking rules to account for new technologies but that businesses providing similar services should be regulated similarly, regardless of the technologies that power the services.
“Consumers, investors, and businesses should be protected from fraud and misleading statements regardless of whether assets are stored on a balance sheet or a distributed ledger,” Yellen said. “And taxpayers should receive the same type of tax reporting on digital asset transactions that they receive for transactions in stocks and bonds so that they have the information they need to report their income to the IRS.”
The speech came nearly a month after President Joe Biden signed an executive order requiring federal agencies to engage in a broad review of their policies related to cryptocurrencies and other digital assets and as the U.S. Securities and Exchange Commission is engaged in efforts to register large cryptocurrency exchanges.
Digital assets have grown explosively, reaching a market cap of $3 trillion last November from $14 billion just five years before that. They’ve since pulled back and are around $2 trillion in market cap now.
As banks and other traditional financial firms become more involved in digital asset markets, Yellen said, “regulatory frameworks will need to appropriately reflect the risks of these new activities.” The use of cryptocurrency and other digital assets has exploded in recent years. Surveys show that roughly 16% of adult Americans — or 40 million people — have invested in cryptocurrencies. And 43% of men aged 18 to 29 have put their money into cryptocurrency.
Image: Wikimedia commons
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.