Jannet Yellen, the US Treasury Secretary, made a cultured and sensible remark about the perfect approach for regulating digital cryptocurrencies, assets, innovations, and policies around them.
Yellen noted the sector’s massive growth to USD3 trillion from USD14 billion in only five years. She also noted the origins, including Bitcoin’s white paper, which provided a solution to helping avoid crypto coins getting spent twice.
Yellen Proposals, “Thompson Principles,” and Biden Presidential Order
The role of the government, according to Yellen, is to ensure there is a responsible innovation that works for Americans, protecting their national security interest and our planet. Also, it should contribute to economic growth and competitiveness. Such responsive innovation should reflect thoughtful public-private conversations and factor-in lessons from financial history.
Adelle Nazarian, the CEO of the American Blockchain PAC, welcomed Yellen’s guidelines for the process of developing a legal and regulatory structure for protecting the public while creating a climate that fosters innovation. She observed that there is a need for new rules, language and a realistic framework for initial coin offering (ICO) in line with anti-money laundering (AML) policies.
Nazarian added that Representative Glen Thompson promoted the “crypto regulatory blueprint,” now known as the “Thompson principles” to provide a framework for:
- The creation of digital commodities.
- Accounting of stable coin assets and liabilities.
- Protecting customers with stablecoins.
- Registering asset-backed digital commodities.
The “Thompson Principles” can help to honor Yellen’s recommendations.
Yellen recommended that trading venues should delve into the Digital Commodity Exchange regime. They can also remain regulated under individual state money transmitter licenses. Therefore, trading venues would be incentivized to select the Commodities Futures Trading Commission to cut the regulatory burden of dealing only with multiple regulators.
A Congressional Research Service report indicates that 49 states require registration to act as money transmitters. To work through the bureaucratic logistics of crafting compliance would cost millions and many years. This means that the process is prohibitive for most start-ups, slowing down innovations. Therefore, allowing firms to select “one-stop shopping” would honor Yellen’s recommendations.
President Joe Biden’s Executive Order also called for mitigation of risks while emphasizing that the nation has a deep interest in ensuring it stays at the frontline of the digital asset technology that is expected to guide new methods of payment.
The White House, Members of Congress, and the Secretary of Treasury, including Rep Thompson (the author of “Thompson principles,” and Tom Emmer (R-Minn.), among other stakeholders in the burgeoning distributed ledger sector, should commence a dialogue to advance Yellen’s recommendations and President Biden’s focus on public safety and staying ahead in tech-development.
