Yellen calls for crypto regulation to reduce risks, fraud

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Yellen calls for crypto regulation to reduce risks, fraud

Treasury Secretary Janet Yellen says more government regulation is required to control digital assets’ growth and keep away fraudulent and illegal transactions.

In reality, one of the outcomes could be that customers receive a record of the transactions they made with crypto to file their taxes.

“Taxpayers should receive the same type of tax reporting on digital asset transactions that they receive for transactions in stocks and bonds to have the information they need to report their income to the IRS,” Yellen made clear in her remarks for presentation on Wednesday at American University.

It was Yellen’s first public appearance on digital currencies after president Joe Biden signed an executive order on digital assets back in March.

The administration’s action follows several notable instances of cryptocurrency-related alleged fraud and laundering this year. In February, the Justice Department announced its largest-ever financial seizure – over $3.6 billion, and the arrests of two individuals suspected of conspiring to conceal millions of dollars of cryptocurrency that Who stolen in the hack in 2016 of the virtual currency exchange.

In March, Federal regulators charged two brothers with fraudulently defrauding thousands of investors from $124 million in unregistered securities offerings that involved an electronic token.

“To the extent there are gaps, we will make policy recommendations, including assessing potential regulatory actions and legislative changes,” Yellen stated.

Biden’s executive decree regarding oversight by the government of cryptocurrency calls on for the Federal Reserve to explore whether the central bank could create its currency digitally. It also requires officials from the Treasury Department and other federal agencies to research the implications that cryptocurrency could have on financial institutions’ stability and national security.

As banks and other traditional financial firms get more involved in the digital asset market, Yellen said, “regulatory frameworks will need to reflect these new activities’ risks appropriately.”

Cryptocurrency, as well as other digital assets, has exploded over the last few years. Studies show that around 16 per cent of adult Americans, which is 40 million people, have made investments in cryptocurrency. A majority of men aged 18-29 have invested money in cryptocurrency.

“Our regulatory frameworks should support responsible innovation while managing risks – especially those that could disrupt the financial system and economy,” Yellen declared.

Administration officials and lawmakers have expressed concerns regarding the possibility that Russia might use cryptocurrency to mitigate the negative consequences of the avalanche of sanctions on banks, oligarchs, and the energy industry over the last weeks following an invasion by Ukraine. However, Treasury officials and cryptocurrency experts have also said that crypto isn’t an option to circumvent sanctions.

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