U.S. Treasury Secretary’s Speech on Digital Asset

A digital dollar could become a "trusted money comparable to physical cash," U.S. Treasury Secretary Janet Yellen said in her first speech on digital assets on Thursday.

Speaking to attendees at an American University event, Yellen highlighted the extreme divergence of perceptions about crypto, saying that’s often the case with “transformative” technology.

Between Step Back for Innovation and More Restrictive

“Some proponents speak as if the technology is so radically and beneficially transformative that the government should step back completely and let innovation take its course,” she said. “On the other hand, skeptics see limited, if any, value in this technology and associated products and advocate that the government take a much more restrictive approach.”

CBDC

She focused part of her speech on central bank digital currencies (CBDCs), an area of interest for U.S. policymakers over the past few years.

Yellen said. "Some have suggested a CBDC could be the next evolution in our currency.
A recent report by the Federal Reserve opened a public dialogue about CBDCs and the potential benefits and risks that could be associated with issuing one in the U.S."

Yellen said,
Any potential CBDC design would have to address

1. its impact on the financial system,
2. ability to address financial crime and national security questions,
3. privacy implications,
4. ability to address macro policy and how it might interact with existing fiat currencies, stablecoins or other CBDCs,

Pointing to U.S. President Joe Biden's executive order on digital assets, Yellen said any potential CBDC would have to support the dollar's role in international markets.

"I don't yet know the conclusions we will reach, but we must be clear that issuing a CBDC would likely present a major design and engineering challenge that would require years of development, not months.
So, I share the president's urgency in pulling forward research to understand the challenges and opportunities a CBDC could present to American interests," she said.

Yellen’s Way

Yellen highlighted five lessons she believes apply to Treasury's work on digital assets through her speech:
the financial system "benefits from responsible innovation," the potential harms to vulnerable individuals if regulation does not keep up with innovation, rules should focus on activities and their risks rather than technologies specifically, the U.S. benefits from the dollar's current role and regulators should work with industry in supporting responsible innovation.

The Treasury secretary pointed to specific concerns around the existing crypto market, such as runs on stablecoins. She referenced last year's Iron Finance run, when its TITAN token fell in price, which led to its IRON stablecoin losing its peg to the U.S. dollar.

My View

Yellen point out some of core issues well that shows the intention to protect the core technology and industry, but restrictive action could apply to activities through the technologies.
But still it seems that U.S. government doesn’t understand deeply the core ecology, the innovation direction and which ones are fake.
U.S. government may need more experienced talents who have insight and could see the core and truth of this complex and fast changing world.

Overall it looks good for crypto future regarding this short message.
Having many options including CBDC, crypto world may have a lot of transformative ways and time. Now it just started.