Janet Yellen says Treasury not responsible for ‘quarterbacking’ between SEC, CFTC over crypto rules

On Jul 9, 2024

US Secretary of the Treasury Janet Yellen said the Treasury is not responsible for ‘quarterbacking’ between the CFTC and the SEC regarding their opposing positions toward crypto regulation.

Yellen made the statement during a July 9 hearing before the House Financial Services Committee.

Opposing positions

House Financial Services Committee Chairman French Hill said that the SEC and CFTC have taken opposing legal positions in federal court on crypto and asked if the Treasury’s Financial Stability Oversight Council (FSOC) is working to unite the two regulators.

Hill said the council is “supposed to quarterback for financial risk.” However, Yellen disagreed, stating:

“It’s not the job of the Financial Stability Oversight Council to adjudicate.”

She noted that the Treasury had published a report on crypto risks, partly addressing risks arising from a lack of agreement between regulators.

Earlier in her testimony, Yellen told Hill she remains committed to achieving a regulatory framework for digital assets and hopes the efforts “reach a good conclusion.”

Concentrated risk, Russian stablecoins

Yellen also responded to other questions related to crypto. Congressman Mike Flood asked Yellen whether decentralized trading protocols require a different approach to regulation from centralized services.

Yellen answered that the SEC and CFTC are looking at the issue and added that some matters “may fall under the regulatory umbrella of the banking agencies as well.”

Flood also questioned whether SEC rulemaking could reduce custodial options for crypto. He asked Yellen if a limited number of approved custodians available to registered investment advisors (RIAs) for Bitcoin ETFs would introduce concentrated risk.

The Treasury secretary responded that the trend could pose a “potential” risk but declined to answer with certainty without more details.

Congressman Brad Sherman commented on the Russian central bank’s plans to bypass Western sanctions with crypto. Yellen said that the Treasury is “very attentive” to the use of crypto and stablecoins but does not believe that Russia’s activities are substantial.