Janet Yellen ,the US Secretary of the Treasury called on U.S. legislators to develop a reliable federal framework on stablecoins to address risks towards financial stability.
In the recent hearing of the Senate Banking Committee on the Financial Stability Oversight Council Annual Report to Congress, she reiterated on her prior position calling for a regulatory framework on stablecoins and citing a November report from the President’s Working Group on Financial Markets.
She went on to comment on TerraUSD, the third largest stablecoin by market capitalization which dropped to $0.67 in the last 24 hours. She reiterated the risk for financial stability and that a proper framework is suitable moving forward.
Senator Pat Toomey also pointed out that UST was an algorithmic stablecoin which is not backed by cash or securities. The Treasury Secretary added it would be highly appropriate to aim for a stable federal framework on stablecoins by the end of 2022 given the growth of the market.
In her written testimony for the hearing, the secretary stated the Financial Stability Oversight Council was working on a report in compliance with United States President executive order on digital assets, recognizing potential risks to financial stability as well as any breaches in regulatory oversight.
The order called for several government agencies to coordinate and consolidate policies as part of efforts to develop a national framework on crypto.
