The US treasury seems to be highly in favor of a US Central Bank Digital Currency (CBDC) over other digital assets like Bitcoin. Treasury secretary Janet Yellen has stated that CBDCs and stablecoins could be able to unseat Bitcoin and other cryptocurrencies as they are better suited for widespread use.
Treasury secretary makes case for CBDCs
Yellen said this while delivering her first-ever speech dedicated to cryptocurrencies at the American University’s Kogod School of Business Center for Innovation.
The US regulatory bigwig is confident about her stance and points to the volatile nature of cryptocurrencies. Combined with high transaction fees and low transaction throughput of blockchain technology, Yellen does not see cryptocurrencies being used for everyday purchases. This is why fiat-pegged and digital fiat will have the upper hand.
Other digital assets – like stablecoins or potential Central Bank Digital Currencies – could succeed at being more widely used as a means of exchange, raising potential benefits and risks, she said.
Yellen also touched on the US’s crypto policy, innovation, and regulation. Highlighting the recently signed executive order, she revealed that the Biden administration set to embrace digital assets and recognizes its growth.
Essentially, she stated that crypto was part of a larger trend that is the digitization of finance. She also acknowledged the potential of crypto to make the finance industry cheaper to operate and more efficient by cutting out the middleman and not requiring trust in third parties.
Regardless, the nascent industry comes with dangers she shared. This led to her reiterating the need for more crypto regulations in the US to prevent fraud and scams and to also tax the industry appropriately.
US crypto regulations taking shape
Yellen’s official remark on the crypto industry has been given impetus by the recently signed executive order by President Biden. The EO directed several federal agencies to study all aspects of the impact crypto can have on the US.
Other US market regulators including the SEC and the CFTC have also been calling for greater regulation of crypto. In prepared remarks delivered at an event hosted by the University of Pennsylvania Carey Law School, SEC chair Gary Gensler called for collaboration between his commission and the CFTC, especially for regulating crypto exchanges.
He opined that the framework for regulating crypto had to be more robust, more rules need to be introduced, and crypto should in no way be given preferential treatment.
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