U.S. Treasury Secretary Janet Yellen said on Thursday crypto asset regulations should support responsible innovation while managing risks, sticking to the direction of a recent White House executive order which was well-received by the crypto market.
In her speech on digital assets policy, Yellen said that in a lot of cases regulators already have authorities that can manage crypto risks. They should also provide appropriate oversight of any new types of intermediaries such as crypto exchanges.
Yellen said, "Our regulatory framework should be designed to support responsible innovation while managing risks - especially those that could disrupt the financial system and economy.
Furthermore she added "As banks and other traditional financial firms become more involved in digital asset markets regulatory frameworks will need to appropriately reflect the risks of these new activities".
Yellen also said that wherever possible crypto regulations should be "tech neutral" and guided by risks associated with services provided to households and businesses, not the underlying technology.
"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. "Similarly, firms that hold customer assets should be required to ensure those assets are not lost, stolen, or used without the customer’s permission."