US Treasury Secretary Janet Yellen has called for legislation to regulate stablecoins before the end of 2022. At the Senate Banking Committee hearing, she mentioned the incident with the algorithmic stablecoin TerraUSD (UST), which lost its peg to the dollar.
Janet Yellen is talking regarding $UST… and her thoughts are arguably accurate.
Regulators can’t help but drop the hammer when they see these things happen, for better or for worse.
Shot ourselves in the foot this time. pic.twitter.com/4wZhhArRxA
— The Wolf Of All Streets (@scottmelker) May 10, 2022
Yellen noted that UST survived bank-run and dropped in price.
“I think this illustrates that this rapidly evolving product carries risks to financial stability, so we need appropriate [регуляторные] framework,” she said.
Cryptocurrency-friendly Senator Pat Toomey stressed that UST is an algorithmic stablecoin.
“This means that, by definition, it is not backed by cash or securities like more traditional stablecoins. I think that’s an important distinction,” he explained.
Formerly Toomey called “stable coins” an important innovationwhich can speed up and reduce the cost of payments, bring benefits to businesses, and also contribute to the development of the digital economy.
Recall that amid the collapse of the cryptocurrency market, UST lost its peg to the US dollar. On the night of May 10 the price of the asset fell below $0.62.
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