Janet Yellen Says Stablecoins can Lead to Instability

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Janet Yellen says stablecoins can lead to instability; UK government to step up crypto regulation efforts; Mike Novogratz says crypto backers dispel the negative mood.

US Treasury Secretary Janet Yellen said that banking laws should be further tightened after the banking crisis.

According to the news of The Wall Street Journal, Yellen stated that there are questions in her mind about whether the system established after the 2008 financial crisis maintains financial stability.

Regulators assisted banks this month and took measures to protect depositors in SVB and Signatur.

Yellen said:

“These events remind us that we urgently need to complete the unfinished business. We need to complete post-crisis reforms, assess whether deregulation has gone too far, and repair the cracks in the regulatory framework created by the recent shock.”

“This was largely due to the post-crisis reforms we implemented. But in both cases, the government had to make significant interventions to ease the pressure on certain parts of the financial system. This means more work needs to be done.”

Targeted stablecoins

The Treasury Secretary has again targeted stablecoins, as he has done many times before. She pointed out that assets such as dollar-pegged money market funds, hedge funds, and stablecoins can each lead to events that can fuel instability.

Yellen also stated that she can make various suggestions to hedge the risk. Additionally, he demanded that Congress pass a bill to treat stablecoin issuers as banks.

UK government to step up crypto regulation efforts

The UK government has revealed its plans to accelerate the regulation of cryptoassets, in response to its efforts to respond to economic crime in the country.

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In a document released on March 30, the UK Treasury and Home Office stated that it plans to firmly regulate cryptocurrencies to combat the illegal use of digital assets. The government had planned to focus on regulation between 2023 and 2026. This plan looked at how crypto assets involved in legal proceedings could be seized and stored.

It was noted that the plan would also be in line with the goals of making the country attractive for crypto assets and crypto innovation. The UK government expects criminals to shift their crypto transactions to less regulated areas.

The National Assessment Center states that, based on estimates of UK trading volumes, illegal crypto transactions linked to the UK in 2021 equaled at least $1.24 billion. Realistically, it is stated that this amount could be much higher.

The UK Treasury has released a report on March 15 announcing that it will change the self-assessment forms of crypto assets for the 2024-25 tax year.

Mike Novogratz says crypto backers dispel the negative mood

Mike Novogratz, founder of digital asset company Galaxy Digital, thinks that the “energetic stance” of crypto investors is removing the bad consequences of US pressure on the industry.

While Novogratz said that institutional money inflow has slowed compared to the bull season, he emphasized that cryptocurrencies are currently on the rise due to the energy of crypto investors.

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Novogratz added:

“Crypto started as a revolution of small people because they didn’t trust governments. You’re battling a crypto community that loves this technology and believes in the industry with an almost religious fervor”

At the PRIORITY summit, Novogratz highlighted Abu Dhabi and Hong Kong, stating that these regions have crypto-friendly regulations. Despite pressure from China, Hong Kong said late last year that it was working to make the province a center for digital assets and web3.

Galaxy Digital CEO stated that he sees the strength of China’s crypto money industry.

Mike Novogratz previously stated that the Bitcoin price could reach $30,000 by the end of March. The asset consolidated at $28,000 today.

Bitcoin has increased by approximately 68% this year, after experiencing a 64% drop in 2022.