According to US Treasury Secretary Janet Yellen, the stablecoin market is not at the scale where the price of TerraUSD (UST) and Tether (USDT) falling below their parity of $1 would pose a threat. for the financial stability of the country.
At a hearing Thursday by the House Financial Services Committee on the Financial Stability Oversight Council’s Annual Report to Congress, Yellen hinted that the stablecoin market was not yet of such a size that UST’s drop below $0.40 and the brief de-pegging of USDT – the largest stablecoin by market capitalization – from the dollar to $0.96 would create a “threat.” real for financial stability”. The Treasury Secretary cited a November report from the President’s Task Force on Financial Markets and said the council was currently looking at “potential risks to financial stability” in the digital asset space.
“They are growing very quickly,” Yellen said, referring to digital assets. “They present the same kind of risks that we have known about for centuries in relation to bank runs.”
Yellen added that a central bank digital currency (CBDC) in the United States could have “a very significant impact on the structure of financial intermediation,” despite potentially having less risk than stablecoins. Her comments came after the Treasury Secretary addressed the Senate Banking Committee in a hearing on Tuesday, calling on lawmakers to develop a “coherent federal framework” on stablecoins to address the risks.
The UST token was pegged to the dollar until Monday, when a sell-off triggered extreme volatility in the price of LUNA and many major cryptocurrencies, including Bitcoin (BTC) and Ether (ETH). The stablecoin fell roughly 70% to a price of $0.29 on Wednesday, and remains unable to regain its peg to the US dollar, trading at $0.37 at press time. The USDT token, by contrast, was unpegged for around 12 hours as of Wednesday before returning to $1.00.
Cointelegraph reported that Terra blockchain validators officially halted network activity on Thursday, aiming to prevent governance attacks following the devaluation of the LUNA token. Binance also delisted LUNA/USDT contracts after the price fell below $0.005.
Keep reading:
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the full amount invested may be lost. The services or products offered are not aimed at or accessible to investors in Spain.