Crypto Poses Harm to the Financial System: Treasury Secretary

Janet Yellen, the United States Treasury Secretary, has once again bashed digital assets in her recent statement, adding that crypto poses harm to the financial system and pointing out the dangers of widespread usage of stablecoins. 

On multiple occasions, the 77-year-old United States Secretary of the Treasury has taken shots at the digital asset sector. According to a recent report by TheCoinRise, Yellen emphasized the need for consumer investment protection in the crypto sector and the use of digital assets for illegal transactions.

Crypto Poses Several Hazards

Yellen is set to appear before the House Financial Services Committee on Tuesday, and according to a brief portion of her testimony posted Monday, the Treasury Secretary will explain the negative impacts of the digital asset sector on the US economy and financial infrastructure. 

She will also highlight the work done by the Financial Stability Oversight Council (FSOC), a group of United States financial agency heads that the secretary leads.

FSOC Focuses on Digital Assets

Yellen’s FSOC seeks to prevent the next financial crisis prior to it actually happening and has recently shifted its focus to the crypto sector. 

“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,” read the testimony which was posted on the committee’s website. 

Report on Crypto Risks

In October 2022, the Council released a report on digital assets and the risks associated with them. The FSOC aims to “add or train staff and engage with government, private-sector, and academic partners to build expertise related to rapidly evolving technological innovation in the crypto-asset space, including capacity to analyze publicly available blockchain data or analyze complaints received by agencies on crypto-assets.”

“The report concludes that crypto-asset activities could pose risks to the stability of the U.S. financial system and emphasizes the importance of appropriate regulation, including enforcement of existing laws. It is vital that government stakeholders collectively work to make progress on these recommendations,” said Yellen at that time. 

Yellen’s Stance on Digital Assets

As per earlier reports, Yellen believes that digital assets are “very risky,” and Congress should release a warning to the society regarding the same. She noted that investing in digital assets is something that should not be recommended to people who are planning their retirement. 

The 78th Secretary of the Treasury Department also recently highlighted that crypto is now playing a major role, not so much in transactions, but in investment choices of many Americans.