US Treasury Secretary Janet Yellen Calls for Stablecoin Regulation by the End of 2022
The push comes amid the de-pegging and continued slip of Terra USD.
In her testimony before Congress on Tuesday, May 10, Janet Yellen called for legislation for regulating stablecoin. In the live stream provided by Yahoo Finance, the treasury secretary noted that the regulation is both important and even urgent.
Yellen’s statement came as an answer to Sen. Pat Toomey’s question: “Is it still your view that it is important… even urgent, for congress to pass legislation governing the regulation of payment stablecoins?”
She confirmed that she would agree with that assessment and added 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.” She also urged that bipartisan action should be taken to ensure legislation gets passed by the end of 2022.
Yellen drew a connection to the run on stablecoin Terra USD (UST) and its decline in value as it became unpegged to its dollar price. She further stated that the rapid growth of these products poses a risk to financial stability. In response, Sen. Toomey pointed out the difference between algorithmic stablecoins like UST and “more conventional” stablecoins like USDC, in that one is backed by crypto assets and the other by fiat, respectively.
At the time of writing, UST sits at $0.45 USD and related asset LUNA at $5.43 USD, down over 80% in the last 24 hours. Some experienced traders, like the CEO of Orca Capital, Jeff Sekinger, attribute the decline of the assets to a coordinated attack.
Markets are meant to correct over levered assets that become over valued because of it.
— Jeff Sekinger (@JeffSekinger) May 10, 2022
Sekinger does not share an opinion on who the perpetrators might be but mentions that “there were two big parties that pulled billions of UST, which created cascading liquidations from the over-leverage on anchor then short sellers piled in.”
In other Crypto news, environmentalists are calling on the US Government to further regulate crypto mining.