U.S. Treasury Secretary Janet Yellen said on Thursday regulation for Bitcoin and other digital assets should be “tech neutral”. These regulations should support “responsible innovation” reflecting “thoughtful public-private dialogue”.
In a speech on digital assets policy released by the Treasury, Yellen said that more regulation is needed to keep a watch on the proliferation of different cryptocurrencies and digital assets, and to prevent fraudulent transactions and illicit activities.
Yellen stressed that digital assets should have the same rules as the traditional financial system. Yellen said:
Wherever possible, regulation should be “tech neutral.” “For example, consumers, investors, and businesses should be protected from fraud and misleading statements regardless of whether assets are stored on a balance sheet or distributed ledger,” Yellen said in statements prepared for delivery Thursday at American University’s Kogod School of Business Center for Innovation.
Yellen mentioned that when new technologies enable new activities, products, and services, financial regulations need to adjust. “But, that process should be guided by the risks associated with the services provided to households and businesses, not the underlying technology,” said Yellen.
To make it more simple for customers to report tax on digital assets, Yellen proposes crypto documentation similar to that of stocks and bonds.
She said, “Taxpayers should receive the same type of tax reporting on digital asset transactions that they receive for transactions in stocks and bonds, so that they have the information they need to report their income to the IRS.”
Yellen also calls for fixing responsibilities for security of such digital assets. She said that crypto firms that hold customer assets should be required to ensure those assets are not lost, stolen, or used without the customer’s permission.
President Biden’s recent executive order directs federal agencies to lay a framework for the digital asset industry.
Due to high volatility in crypto asset pricing and its decentralized nature, some lawmakers want regulators to crack down on the industry, creating some market concerns about tougher regulations. However, the message from the White House and the Treasury Department about promoting responsible innovation with public-private dialogue on crypto has allayed some of those anxieties.
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