Janet Yellen Conveniently Calls For Crypto Regulation Following UST Slip• May 10, 2022 4:11 pm • Comments
Treasury Secretary Janet Yellen is now calling for regulation for the crypto industry especially with a focus on stable coins.
Yellen commented that she believes that it is highly urgent that some type of legislation is passed by the end of the year to address stable coin regulation.
Her comments may have been caused by the recent UST slip over the weekend where the stable coin experienced a decline in value where the stable coin has decreased in value by around 30% before recovering back to 90 cents.
It could be that algorithmic stable coins like UST are still new products that have not been full tested yet, but some within the crypto community see this as the government making sure that it does not let a crisis go to waste.
After all, many believe that this recent market slump was caused due to the Fed’s recent tightening policies, but there could be other reasons that many are unaware of.
UST makes Congressional testimony faster than it recovers its peg. pic.twitter.com/SS7sJy7UBV
— Nathaniel Whittemore (@nlw) May 10, 2022
Yellen specifically highlighted the weekend’s drama surrounding TerraUSD (UST), saying:
“A stablecoin known as TerraUSD experienced a run and declined in value. I think that this simply illustrates that this is a rapidly growing product and there are rapidly growing risks.”
Toomey, for his part, is behind a piece of legislation seeking to address non-algorithmic stablecoins. In response to Yellen, he noted an “important distinction” with algorithmic stablecoins like UST.
The hearing focused on the work of the Financial Stability Oversight Council, a supervisory regulator that the Treasury Secretary presides over.
The President’s Working Group report on stablecoins from November highlighted that failing congressional action, FSOC should take action to regulate crypto.
This was the topic that Yellen focused on heavily on much of the testimony before the US Senate on Tuesday.
Other things that were mentioned were potential financial risks that such digital assets would create for the US financial system.
The treasury department is due to release a report about the potential risks of the crypto industry following President Biden’s recent executive order earlier in the year.
One of the major complaints within the crypto community is that there is no clear guidelines for crypto which then allows the SEC to pick winners and choosers within the industry due to the unclear rules.
Stable coins aren’t going away. With Janet Yellen speaking about them today only indicates that they need to get their (gov) shit together because the crypto market is growing growing and growing #stablecoins #janetyellen pic.twitter.com/HZq6JnFZd7
— Frog Man🐸 (@NJWeedStocks) May 10, 2022
As a Senate Banking Committee hosted a hearing on risks to the stability of the U.S. financial system, Yellen told senators that UST “experienced a run and had declined in value.”
“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,” she said. She later said legislation to address crypto regulation would be “appropriate” this year.
“There we see run risks which could threaten financial stability – risks associated with the payment system and its integrity and risks associated with increased concentration if stablecoins are issued by firms that already have substantial market power,” Yellen said. “We definitely see significant risks here.”
The timing of this event has, however, been criticized as being very convenient by some as it coincides with the market slump.
@SecYellen When have officials ever been this quick to report on crypto happenings??
Y'all don't think this was planned? #UST #LUNA pic.twitter.com/3iouQRGI1F
— Ryan Williams (@TheWealthHomie) May 10, 2022
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