Janet Yellen says risks related to stablecoins are 'growing very rapidly' but they're not yet a real threat to financial stability
- Treasury Secretary
Janet Yellenon Thursday addressed the loss of US dollar pegs by the stablecoinsTerraUSD and Tether.
- The moves don't yet pose a real threat to financial stability but risks are rising, she said.
Treasury Secretary Janet Yellen on Thursday called for unified federal regulation on
Her testimony before the House Financial Services Committee took place days after the algorithmic stablecoin TerraUSD sharply declined below its $1 peg. The spreading turbulence in the
Stablecoins derive their value from being pegged to another asset, which is supposed to lessen their volatility compared with other
"I wouldn't characterize it at this scale as a real threat to financial stability, but they're growing very rapidly and they present the same kind of risks that we have known for centuries in connection with bank runs," Yellen told lawmakers. The House Financial Services Committee was holding a hearing on the annual report of the Financial Stability Oversight Council.
More than $300 billion has been wiped off the value of the overall crypto market between Monday and Wednesday, according to figures from CoinMarketCap. Crypto prices continued to fall on Thursday, sending the market's value to around $1.22 trillion. TerraUSD, the flashpoint of the current market downturn, recovered some ground but at $0.33 was still below its $1 peg.
Yellen characterized stablecoins as assets that purport to guarantee conversion at-will to the dollar on a 1-for-1 basis.
"Really we need a comprehensive framework so that there are no gaps in the regulation" as the use of digital assets is rapidly increasing, said Yellen.
The President's Working Group on Financial
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