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These days stablecoins are a controversial topic in Washington. U.S lawmakers are demanding the regulation of stablecoin urgently after Monday’s terra USD (UST) disaster.
Janet Yellen, U.S. Treasury Secretary, give U.S. Treasury Secretary during her testimony before the Senate Committee on Banking, Housing, and Urban Affairs on the Financial Stability Oversight Council (FSOC) Annual Report, on Tuesday.
Senator Pat Toomey (R-Pa.) inquired Yellen about her view on the requirement for regulating stablecoins. Toomey asked her said that if she could verify for the record here that she still believed in the importance of it. He then added that “I would argue even urgent, for Congress to pass legislation governing the regulations of the payment stablecoins.”
Yellen said she was happy to confirm that. She then goes on to say that the working group of the president issued a report saying the present statutory and regulatory frameworks do not offer comprehensive and consistent standards for the stablecoins risks, as the latest payment products, demanding from Congress to draft the legislation for ensuring that stablecoins and such a federal prudential framework.”
The treasury secretary explained that she would call for a bipartisan action to create a framework. She further added that they are excited to work with them.
This morning, as per a Wall Street Journal, terra USD [UST], a stablecoin, witnessed a run and has experienced a decrease in value.
Yellen further said that this shows that it is a rapidly growing product and has risks attached to financial stability along with an appropriate framework.
Quickly responding, Toomey said that it is quite important to note that the stablecoin you are referring to is an algorithmic stablecoin, meaning by definition it is not supported by cash or securities as they are ‘more conventional stablecoins.'”
On Monday, TerraUSD (UST), a stablecoin, lost its parity with the U.S. dollar, dropping to an all-time low of $0.66 per unit.
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