Treasury Secretary Janet Yellen advocated for greater regulation of cryptocurrency transactions, the Associated Press reports. Her Thursday speech comes during an unprecedented proliferation of cryptocurrency and other digital assets amid revelations of fraud perpetrated on cryptocurrency users. In February, the Department of Justice conducted the largest financial seizure in its history—$3.6 billion—and arrested a couple for conspiring to launder billions of dollars stolen in a 2016 hack of a cryptocurrency exchange. In March, President Biden signed an executive order that tasked the Federal Reserve with studying whether it should create its own digital currency and directed the Treasury Department to assess the impact of cryptocurrency on financial stability and national security.
Yellen said that as traditional financial institutions become more involved in digital asset markets, “regulatory frameworks will need to appropriately reflect the risks of these new activities.” She added, “Our regulatory frameworks should be designed to support responsible innovation while managing risks – especially those that could disrupt the financial system and economy." At a time when 16 percent of adult Americans and 43 percent of men age 18 to 29 are invested in crypto, one simple reform that regulators have envisioned is sending users of crypto marketplaces documentation for use in filing their taxes. Some lawmakers have also voiced concerns that Russia may be using cryptocurrency to skirt sanctions, but Treasury officials have deemed this unlikely.