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WASHINGTON (AP) — More government regulation is needed to contain the spread of cryptocurrency and other digital assets and prevent fraudulent and illegal transactions, Treasury Secretary Janet Yellen said.
In practice, one result would be that users receive documentation of crypto transactions to use when filing their taxes.
“Taxpayers should receive the same type of tax reporting on digital asset transactions they receive for stock and bond transactions so they have the information they need to report their income to the IRS,” Yellen said in statements prepared for delivery Thursday. American University.
It would be Yellen’s first speech on cryptocurrency since President Joe Biden signed an executive order regarding digital assets in March.
Management’s action follows several high-profile examples of alleged cryptocurrency laundering and fraud this year. In February, the Department of Justice announced its largest ever financial foreclosure (over $3.6 billion) and the arrest of a couple accused of conspiring to launder billions of dollars in cryptocurrency stolen from a cryptocurrency exchange hack in 2016.
And in March, federal regulators accused the two brothers of defrauding thousands of investors for $124 million in offers of unregistered securities containing a digital token.
“To the extent that gaps exist, we will make policy recommendations, including consideration of potential regulatory actions and legislative changes,” Yellen said.
Biden’s executive order on government oversight of cryptocurrency calls on the Federal Reserve to investigate whether the central bank should create its own digital currency, and directs the Treasury Department and other federal agencies to examine the impact of cryptocurrency on financial stability and national security.
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 said.
The use of cryptocurrency and other digital assets has exploded in recent years. Surveys show that roughly 16% of adult Americans – or 40 million people – have invested in cryptocurrencies. And 43% of men aged 18 to 29 have invested their money in cryptocurrency.
“Our regulatory frameworks must be designed to support responsible innovation when managing risks, particularly those that could disrupt the financial system and economy,” Yellen said.
Lawmakers and administration officials have expressed concerns that Russia may be using cryptocurrency to avoid the impact of the avalanche of sanctions imposed on banks, oligarchs and the energy industry over the occupation of Ukraine in recent weeks. However, Treasury officials and crypto experts said that crypto is not a workaround for sanctions.
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