Yellen, Experts Disagree on Future of Crypto Regulation as U.S Falls Behind in Global Race
In the lead-up to the crucial 2024 election, U.S. Treasury Secretary Janet Yellen is gearing up to address the House Financial Services Committee today. Her focus will be on the latest findings from the Financial Stability Oversight Committee (FSOC), shedding light on the potential risks tied to the crypto industry.
Yellen’s sneak peek testimony on Monday highlighted the dangers associated with the crypto industry, including the risks tied to stablecoins, potential runs on crypto platforms, and the ever-present threat of price volatility.
With unclear regulations hanging over the crypto landscape, Yellen issues a stern warning. She emphasizes that without decisive action from Congress, the government is ready to step in and implement clear rules to address these emerging risks.
Key Topics in Focus
AI in Finance
Acknowledging the increasing use of Artificial Intelligence (AI) in the financial sector, Yellen will touch upon its potential benefits. However, she emphasizes the need for robust oversight by financial bodies and regulators to prevent potential pitfalls.
Market Instabilities
Yellen amplifies FSOC’s concerns regarding potential market instabilities in the crypto world. Specific risks include runs on crypto-asset platforms, vulnerabilities due to price fluctuations, and the rise of platforms operating outside legal and regulatory frameworks.
When Will the Congress Step In?
While underscoring potential risks, Yellen advocates for clear rules and regulations. She stresses that Congress needs to pass legislation, and these rules should be enforced. Lawmakers are actively crafting legislation, with a specific focus on stablecoins and a broader approach to market structure. However, the U.S. lags behind Europe and Hong Kong, where clearer regulatory frameworks are already taking shape.
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USA Left Behind?
The European Securities and Markets Authority (ESMA) seeks public feedback on standards under the Markets in Crypto-Assets (MiCA) regulation. Simultaneously, the European Union proposes stricter rules for foreign crypto firms. In Hong Kong, a decisive regulatory stance is evident, with mandates for unlicensed crypto firms to cease operations by May 2024.
In a stark contrast, the U.S. seems to be lagging in establishing clear rules, with discussions around risks prevailing in the absence of concrete regulations. All talk, no action.
The End of Crypto is Approaching!
Wendy O, a prominent YouTuber and crypto expert, echoes the sentiments of Federal Reserve Chair Powell. She highlights his prediction of a potential crypto collapse in around 30 years. However, Wendy posits that the real threat may not be from crypto but from U.S. officials themselves. Yellen, following Warren’s lead, attributes banking collapse risks to crypto assets, but Wendy challenges this narrative, suggesting that the true threat lies within the actions of U.S. officials.
Also Read: Stablecoin Boom Expected in 2024 Post Clearer Regulations, Predicts Circle CEO
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