Crypto Regulation Should Aim To Avoid Financial System Disruption: Treasury Secretary Janet Yellen

United States Treasury Secretary Janet Yellen expressed her ideas concerning the regulation of cryptocurrencies such as Bitcoin BTC/USD during a speech on digital assets policy at the American University in Washington.

What Happened: Yellen said the U.S. crypto regulatory framework "should be designed to support responsible innovation while managing risks," according to a Thursday Reuters report.

Among those risks, she highlighted "especially those that could disrupt the financial system and economy."

Yellen said that "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."

The United States' crypto regulatory framework remains lacking at best and regulators are still dubious about the best approach to oversee platforms and services operating in this industry, including traditional banking services such as custody.

Some lawmakers insist on the necessity for a crackdown on the industry due to its extreme volatility, but Yellen said "responsible innovation" deserves its place in the United States.

At the end of March, she also recognized that crypto has grown by “leaps and bounds" and is now playing a "significant role" in the investment decisions of many Americans.

Treasury Secretary Janet Yellen. Benzinga file photo by Dustin Blitchok.