Treasury Secretary Janet Yellen To Warn Congress Of Crypto Risks To The Financial System

Updated: 06 February 2024

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U.S. Treasury Secretary Janet Yellen is set to warn Congress of crypto industry hazards for the financial system that include runs on crypto-asset platforms and stablecoins.

Yellen is appearing before the House Financial Services Committee on Feb. 6 to explain the latest work of the Financial Stability Oversight Council (FSOC), a group of financial agency heads that aims to head off future financial crises.

In testimony prepared for delivery, Yellen highlighted “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 added that ”applicable rules and regulations should be enforced, and Congress should pass legislation to provide for the regulation of stablecoins and of the spot market for crypto-assets that are not securities.”

#HappeningNow: Chairman @PatrickMcHenry convenes the House Financial Services Committee on the annual report of the Financial Stability Oversight Council featuring testimony from @USTreasury Secretary Janet Yellen.

📺 Tune in 🔗https://t.co/jNv7GiI4Qd pic.twitter.com/aCD6wlL0W8

— Financial Services GOP (@FinancialCmte) February 6, 2024

Yellen To Work With Congress On Crypto Legislation

The FSOC has paid special attention to crypto in recent years, and has also put digital assets among the top categories of potential worry. As such, Yellen said that she will keep working with Congress on crypto legislation.

Yellen initially drew regulatory attention to the crypto sector after she said in January 2021 that crypto has a high potential to make the financial system stronger. However, she expressed concerns around digital assets being used “mainly for illicit financing.”

Other areas Yellen will focus on in her testimony include the banking sector, cybersecurity risks. and artificial intelligence in financial services. Member agencies enhancing assessment efforts and increasing coordination around climate-related financial stability risks were also highlighted in the report.