- Yellen testified before Congress advocating for stricter regulations on cryptocurrencies and vigilance around AI in finance as these technologies rapidly evolve.
- Yellen highlighted regulatory gaps being exploited in crypto for illicit finance and stablecoins’ vulnerability to bank run-style crises, arguing comprehensive oversight is needed.
- Yellen acknowledged AI’s potential to introduce systemic risks and called for financial institutions and regulators to proactively monitor AI to stay ahead of market shocks.
Treasury Secretary Janet Yellen recently testified before Congress, calling for stricter regulations on cryptocurrencies and vigilance around AI in finance. Her remarks come amid rapidly evolving digital assets and advanced technologies reshaping the financial sector.
Yellen Highlights Regulatory Gaps Around Digital Assets
Yellen pointed to stablecoins as especially vulnerable to bank run-style crises due to their peg to assets like the dollar. She argued comprehensive oversight is needed to protect against risks like fraud and manipulation in the crypto sector.
Yellen also noted regulatory gaps being exploited for illicit finance and the necessity of legislative support to enhance the government’s capabilities. She cited crypto’s use by terrorists and stressed the importance of updated tools to effectively combat these threats.
Monitoring AI’s Systemic Risks
When asked by Senators about AI, Yellen acknowledged the potential for technologies like AI to introduce systemic vulnerabilities. She advocated for financial institutions and regulators to proactively enhance their knowledge and monitoring to stay ahead of AI-induced market shocks.
Call for Legislation
Yellen’s testimony underscores the growing consensus around the need for new laws to address digital assets and advanced technologies. As these innovations spread through finance, she argues regulatory frameworks must evolve to safeguard stability and security.
Conclusion
With crypto integrating into mainstream finance and AI advancing rapidly, Yellen is pressing lawmakers to pass comprehensive legislation. This testimony highlights regulators’ mounting urgency around oversight of digital currencies, stablecoins, AI, and more.
