Treasury Secretary Yellen's first speech on crypto will focus on existing laws — except for stablecoins

Treasury Secretary Janet Yellen will speak on cryptocurrencies today at American University in Washington, DC.

A much-anticipated event, it is the first time Yellen is addressing the subject at length. Based on excerpts of the speech shared with The Block and conversations with Treasury officials familiar with the matter, here’s what to expect.

The speech comes in response to President Joe Biden’s March executive order on cryptocurrencies, which directed agency coordination on broad frameworks for cryptocurrency policy. 

Like that executive order, Yellen’s speech will be high-level and politically minded, which is to say scant on details for specific policies. However, Yellen appears set to emphasize existing statutory authorities more than she will push for any new law expanding Treasury’s authority in crypto:

“In many cases, regulators have authorities they can use to promote these objectives and Treasury supports those efforts. To the extent there are gaps, we will make policy recommendations, including assessment of potential regulatory actions and legislative changes.”

Yellen’s remarks likewise say: “Wherever possible, regulation should be ‘tech neutral.”

She will also, Treasury officials say, be careful to contextualize cryptocurrency within historical assets and make recommendations “[c]onsistent with existing statutory mandates.”  

The primary exception will be stablecoins. Yellen will continue to support the President’s Working Group’s recommendations from November in some form or another.

Of note from the standpoint of regulation rather than new legislation, Yellen’s comments focus particularly on custody and tax reporting:

“Firms that hold customer assets should be required to ensure those assets are not lost, stolen, or used without the customer’s permission. And 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.”

At the same time, Yellen’s speech will emphasize the Treasury’s support for innovation. Particularly, she will point to problems with the speed, cost and inclusiveness of existing payments as areas that could benefit from digital ingenuity. 

On April 6, Yellen appeared before the House Financial Services Committee to testify on the state of international finance, in a hearing that focused extensively on crypto’s role in Russia’s sanctions evasion.