US lawmakers call for urgent stabilcoin regulation – Fed warns of stabilcoin launch, Janet Yellen quotes UST fiasco – Bitcoin regulations

US lawmakers call for urgent stabilcoin regulation – Fed warns of stabilcoin launch, Janet Yellen quotes UST fiasco – Bitcoin regulations

While U.S. lawmakers are pushing for urgent regulation of stabilcoin, the Financial Stability Board (FSOC) and the Federal Reserve Board are warning of the risks of stabilcoin launches that threaten the country’s financial stability. Finance Minister Janet Yellen cited the terausd fiasco (UST) as an example of why a comprehensive regulatory framework is urgently needed.

Finance Secretary Janet Yellen testifies before a Senate committee

Stablecoins have become a hot topic in Washington. Following the terausd (UST) fiasco on Monday, U.S. lawmakers are calling for urgent regulation of stable coins.

On Tuesday, US Treasury Secretary Janet Yellen cited UST as an example of “running stable coins” during her testimony before the Senate Committee on Banking, Housing and Urban Affairs of the Financial Stability Board (FSOC) Annual report.

Senator Pat Toomey (R-Pa.) Asked Yellen to reaffirm his position on the need to regulate stable coins. “I would like to ask you if you can confirm for the record that your position is still important, I would say even urgent, for the Congress to pass a law that regulates the regulations on the payment of stable chickens,” he said.

Yellen replied:

Yes, I’m glad to confirm that, Senator Toomey.

She continued: “The President’s working group has issued a report concluding that current statutory and regulatory frameworks do not provide consistent and comprehensive standards for stable coin risks as new types of payment products, and calls on Congress to enact laws to ensure stable and such arrangements have a federal prudential framework. ”

The Secretary of the Treasury elaborated: “I would call for a bipartisan action to create such a framework.” We look forward to working with you. ” she added:

This morning, a report was published in the Wall Street Journal that a stable coin is known as terrausd [UST] experienced a run and fell in value.

“I think it simply illustrates that this is a fast-growing product and that there are risks to financial stability and that we need a framework that is appropriate,” Yellen said.

Toomey was quick to respond: “It is important to note that the stablecoin you are referring to is, I believe, an algorithmic stablecoin. So that means that by definition it is not backed by cash or securities as – if you can call them – ‘more conventional stable coins’. ”

Stablecoin Terraced (UST) lost its parity with the US dollar and fell to a low of $ 0.66 per unit on Monday.

The Financial Stability Board’s annual report warns of the launch of Stablecoin

The FSOC Annual Report it also states that stable coins can be risk sensitive. Noting that “the potential for increased use of stable coins as a means of payment raises a number of cautious questions,” the report said:

If issuers of stable coins do not comply with the request to buy stabilcoin, or if users lose confidence in the ability of the issuer of stable coins to comply with such a request, an arrangement may be launched that could harm users and the wider financial system.

The report of the Federal Reserve Board on financial stability says that stable coins are prone to twitching

The FSOC’s position on stable coins is shared by the Federal Reserve. The Board of Governors of the Federal Reserve System has announced its semi-annual Financial Stability Report Monday similarly warns of the risks of stable coins.

Among the risks discussed in the report are “financing risks”, which “expose the financial system to the possibility of investors ‘running’ by withdrawing their funds from a particular institution or sector,” the report states in detail, elaborating:

Some types of money market funds (IMF) and stable coins are still prone to running.

In addition, “the stable coin sector has continued to grow rapidly and is still exposed to liquidity risks,” the report said.

Labels in this story

Federal Reserve, financial stability, Janet Yellen, pat toomey, Stablecoins, regulation of stable coins, stable risks, stablecoin run, Stablecoins, TerraUSD, terrausd unpeg, UST, you fiasco, ust run, UST Stablecoin

What do you think of Finance Minister Yellen’s comments and Federal Reserve and Financial Stability Board warnings about stable coins? Let us know in the comments section below.

US lawmakers call for urgent stabilcoin regulation – Fed warns of stabilcoin launch, Janet Yellen quotes UST fiasco – Bitcoin regulations

Kevin Helms

A student of Austrian economics, Kevin discovered Bitcoin in 2011 and has been an evangelist ever since. His interests lie in the security of Bitcoin, open source systems, network effects and the crossroads between economics and cryptography.

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