Yellen: crypto regulation needs to be 'tech neutral,' CBDC to take years to develop

WASHINGTON (Apr 7) Any new crypto regulation needs to be "tech neutral" and should be based on risk, said U.S. Treasury Secretary Janet Yellen in her first major speech to the cryptocurrency industry.

Yellen gave a comprehensive overview of her outlook on crypto regulation, including stablecoins and central bank digital currencies (CBDCs), when speaking at an American University event in Washington Thursday.

"The government's role should be to ensure responsible innovation – innovation that works for all Americans, protects our national security interests and our planet, and contributes to our economic competitiveness and growth," Yellen said. "We must also be prepared for possible changes in the structure of financial markets."

When discussing the type of regulation needed for digital assets, Yellen maintained that the overall framework needs to be based on risks rather than specific technologies.

"The process should be guided by the risks associated with the services provided to households and businesses, not the underlying technology, she said. "Wherever possible, regulation should be 'tech neutral.' For example, consumers, investors, and businesses should be protected from fraud and misleading statements regardless of whether assets are stored on a balance sheet or distributed ledger."

Yellen stressed that sovereign money is at the core of a well-functioning financial system. This is important when considering her take on stablecoins and a potential CBDC.

"The U.S. benefits from the central role the dollar and U.S. financial institutions play in global finance," she said. "The dollar is the most widely used currency for global trade and finance … Monetary sovereignty and uniform currency have brought clear benefits for economic growth and stability. Our approach to digital assets must be guided by the appreciation of those benefits."

KITCO