Treasury Sec Janet Yellen says she’s “supportive” of SEC’s regulatory approach

US Treasury Secretary Janet Yellen says she supports what regulatory agencies are doing in terms of using available tools to protect consumers and investors in the crypto space.

Yellen’s comments came on Wednesday during an interview with CNBC’s Squawk Box, and only a day after the SEC filed a lawsuit against Coinbase. The regulator had previously sued leading crypto exchange Binance and its founder Changpeng Zhao.

"We've identified a number of risks [with crypto]. I'm supportive of those agencies to use the tools they have," says @SecYellen. "I see some holes in the system where additional regulation would be appropriate. We'd like to work with Congress to see additional regulation pass." pic.twitter.com/leZjF5QRU0

— Squawk Box (@SquawkCNBC) June 7, 2023

Yellen says she supports the SEC, CFTC

Although she declined to comment specifically on the two events, the Treasury Sec told CNBC:

“Our laws are already strong. The SEC, the CFTC, and other regulators have the ability and tools to protect consumers and investors and I’m very supportive of seeing those agencies use the tools they have.”

Despite noting that she cannot comment on individual cases currently being handled by the SEC, Yellen said its “appropriate they do that” – which is saying she agrees with the agency’s complaints against the leading crypto exchanges.

Yellen also referenced recommendations in the Financial Stability Oversight Council (FSOC) report that the Treasury Department contributed to last year. The report highlighted the potential risks of crypto to US stability, and was mirrored by a White House report that dismissed crypto as of no value.

Commenting on the outlook in view of SEC’s enforcement actions, Yellen said:

“I see some holes in the system where additional regulation I think would be appropriate, and we would like to work with Congress to see additional legislation passed.”

Her comments might not resonate with Coinbase and other crypto businesses in the US, which maintain that the SEC’s approach is negative and that there is no regulatory clarity at all. These sentiments have been echoed by several pro-crypto legislators who have variously slammed SEC for “missing” the FTX debacle and looking to save face by going after everybody else.

Coinbase CEO Brian Armstrong says the SEC allowed it to go public (the IPO was in 2021) but it and the CFTC are issuing “conflicting statements.”  

He noted in a separate CNBC interview that the whole approach does not help America and it’s bad for the industry. However, like in a statement he issued after the SEC announced its lawsuit against his company, Armstrong reiterated the fact that the courts now have to provide the clarity needed.