U.S. Treasury Secretary Dr. Janet Yellen has called on U.S. Congress to enact regulations for stablecoins following TerraUSD’s epic collapse in price last week.
Yellen made her comments last Tuesday (May 10) while testifying before the U.S. Senate Committee on Banking, Housing and Urban Affairs, saying that she believes stablecoins pose a risk to the market’s financial stability.
Yellen argued that the regulatory environment surrounding stablecoins is inadequate and asked Congress to address the discrepancy to prevent further market instability.
As reported by The Daily Hodl, Yellen said,
The President’s Working Group issued a report concluding that current statutory and regulatory frameworks don’t provide consistent and comprehensive standards for the risks of stablecoins as a new type of payment product and urges Congress to enact legislation to ensure that stablecoins and such arrangements have a federal credential framework.
Yellen urged Congress to take bipartisan efforts to create a regulatory framework for stablecoins, adding that her team would “look forward to working with [the committee].”
Yellen noted a Wall Street Journal report the morning of her testimony claiming that TerraUSD ($UST), a stablecoin that is supposed to be pegged to $1, had declined in price. She said the stablecoin’s demise was indicative of a “rapidly growing product” that posed “risks to financial stability” without appropriate regulations.
TerraUSD fell to a low of $0.04 on May 13, causing uncertainty in the crypto markets and contributing to a substantial selloff.
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