The U.S. Treasury Secretary Janet Yellen urges for stablecoin regulation by the end of the year citing the latest TerraUSD(UST) crisis in the market.
Yellen stated “A stablecoin known as TerraUSD experienced a run and had declined in value,” during a hearing before the Senate Banking, Housing and Urban Affairs Committee.
She added “I think that simply illustrates that this is a rapidly growing product and that there are risks to financial stability and we need a framework that’s appropriate.”
Yellen was responding to Senator Pat Toomey, the top Republican on the Banking Committee, who asked her about the significance of passing a regulatory framework for the stablecoin sector.
Given the market’s expansion, the Treasury Secretary said it would be “highly appropriate” to push for a consistent federal framework on stablecoins by the end of 2022.
Janet Yellen urged the members of Congress to work together to pass legislation establishing such a structure for stablecoin.
The UST hasn’t nearly entirely recovered from its severe plunge on May 9th, and is currently trading at $0.5986. On the same day, Terra’s Luna fell 10% on fears that UST might lose its peg, and the community speculated an organized attack on Luna.
Do Kwon, the founder of Terraform Labs tweeted that he was, “close to announcing a recovery plan for $UST,” but didn’t disclose any other specifics by the time of writing.
Secretary Yellen has consistently been vary of stablecoins, and its impact. Even last July, Janet Yellen urged the regulators that the US Government should quickly establish a framework to regulate stablecoin while discussing its potential uses, as well as risks to end users and the financial system.
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