U.S. Treasury Secretary Janet Yellen has urged Congress to address regulatory gaps in digital assets, warning of potential risks to investors and the financial system.
Speaking during a Feb. 6 hearing on the Financial Stability Oversight Council annual report, Yellen responded to inquiries from House Financial Services Committee chair Patrick McHenry regarding pending legislation concerning stablecoins and regulatory clarity in the crypto space. Yellen emphasised the importance of regulation, particularly in safeguarding wallet holders and overseeing stablecoin issuers, labelling it as “critical.”
She highlighted the need for Congress to take action to address identified regulatory gaps, stressing the necessity for consumer and investor protection and mitigating financial stability risks. Yellen pointed out that while certain areas of digital assets are already subject to clear regulatory authority, there remain gaps that require legislative intervention.
Yellen specifically cited the lack of supervisory regulatory authority by the Commodity Futures Trading Commission (CFTC) over spot market commodities related to Bitcoin. She expressed concerns about stablecoins posing risks to the U.S. financial system and advocated for a unified federal regulatory framework applicable across all states, rather than the current decentralised approach.
In line with her previous statements, Yellen reiterated the need for a robust regulatory framework governing cryptocurrencies in the United States. Notably, the House Financial Services Committee had passed two bills, the Financial Innovation and Technology for the 21st Century Act and the Clarity for Payment Stablecoins Act, in July 2023. However, both bills await a full floor vote in the House.
The departure of Representative McHenry, who has chaired the House Financial Services Committee since January 2023, in 2025, as he announced he will not seek reelection, introduces uncertainty regarding the future trajectory of digital asset regulation.