US Secretary of the Treasury Janet Yellenhas called for a law to be passed that will regulate stablecoins in order to stabilize financial stability and eliminate risks.
Speaking to the US Senate Committee on Banking, Housing and Urban Affairs, Yellen stated that the government is already aware that stablecoins operate in an inadequate regulatory and legal environment.
The President’s Working Group has published a report concluding that current legal and regulatory frameworks do not provide consistent and comprehensive standards for the risks of stablecoins as a new type of payment product, and recommends Congress to establish a federal identity framework to ensure stablecoins and such regulations have a legal safeguard. called for legislation.
Designed to be exchanged one-to-one for US dollars TerraUSD (UST) Referring to a newspaper report stating that the algorithmic stablecoin has lost its stablecoin, Yellen stated that this is important evidence of the risks posed by the rapidly expanding stablecoin industry to the stability of financial markets.
“I noted in the Wall Street Journal that there was a report this morning that a stablecoin known as TerraUSD was bullish and devalued. I think this is important evidence that this is a rapidly growing product and that there are risks to financial stability and that we need an appropriate framework.”
TerraUSD is trading at $0.71 at the time of writing, after previously falling as low as $0.30.
The US Treasury Secretary expressed a similar view when talking about the collapse of a partially collateralized stablecoin released by the Iron Finance DeFi platform last month.
Yellen called for a regulatory framework that supports “responsible innovation” in the digital asset space while adequately managing risks.
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