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Treasury Secretary Janet Yellin Calls For Crypto Regulations to Reduce Risk of Fraud

Treasury Secretary Janet Yellin Calls For Crypto Regulations to Reduce Risk of Fraud

Treasury Secretary Janet Yellen believes more government regulation is needed to police the proliferation of cryptocurrency and other digital assets and to ward off fraudulent and illicit transactions. In remarks in a speech delivered at American University on Thursday, Yellen says one result would be that users would get documentation of their crypto dealings for use in filing their taxes.

The Biden administration’s action follows several high-profile examples of alleged cryptocurrency laundering and fraud this year. In February, the Justice Department announced its largest-ever financial seizure of more than $3.6 billion and the arrests of a couple accused of conspiring to launder billions of dollars in cryptocurrency stolen from the 2016 hack in the virtual currency exchange.

 

The use of cryptocurrency and other digital assets has exploded in recent years. Surveys show that roughly 16% of adult Americans — or 40 million people — have invested in cryptocurrencies. And 43% of men ages 18 to 29 have put their money into cryptocurrency.

“Our regulatory frameworks should be designed to support responsible innovation while managing risks – especially those that could disrupt the financial system and economy,” Yellen 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 said Thursday during a speech at American University.

President Biden’s executive order on government oversight of cryptocurrency urges the Federal Reserve to explore whether the central bank should create its own digital currency and directs the Treasury Department and other federal agencies to study the impact of cryptocurrency on financial stability and national security. As banks and other traditional financial firms become more involved in digital asset markets, Yellen said, “regulatory frameworks will need to appropriately reflect the risks of these new activities.”

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