US Treasury Secretary Janet Yellen called on US lawmakers to develop a “coherent federal framework” on stablecoins to address risks that could compromise financial stability.
At a hearing Tuesday by the Senate Banking Committee on the Financial Stability Oversight Board’s Annual Report to Congress, Yellen reiterated her earlier stance calling for a regulatory framework for stablecoins, citing a November report from the President’s Task Force on Financial Markets. In addition, the Secretary of the Treasury commented that TerraUSD (UST), the third largest stablecoin by market capitalization, had fallen to $0.67 in the last 24 hours.
“I think [la situación con TerraUSD] it just illustrates that this is a fast-growing product and there are risks to financial stability and we need a proper regulatory framework,” Yellen said.
Addressing Yellen’s questions, Pennsylvania Senator Pat Toomey also noted that UST was an algorithmic stablecoin, “not backed by cash or securities.” The Secretary of the Treasury added that it would be “very appropriate” to aim for a “consistent federal framework” on stablecoins by the end of 2022, given the growth of the market. He called for bipartisanship among members of Congress to enact such framework legislation.
In his written testimony for the hearing, Yellen said the Financial Stability Oversight Board was working on a report in compliance with US President Joe Biden’s executive order on digital assets, identifying potential risks to financial stability as well as any loopholes. in regulatory oversight. The order called for various government agencies to coordinate and consolidate the policy as part of efforts to develop a national framework for cryptocurrencies.
As treasury secretary in the Biden administration since January 2021, Yellen has previously said that cryptocurrencies represent a “particular concern” for the government department, associating many token projects with “illicit financing” and money laundering. Many of his recent public policy statements regarding the cryptocurrency space seem to have focused on stablecoins and establishing a proper regulatory framework.
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