SEC Commissioner Hester Peirce, also known as "Crypto Mom", has advocated regulation for stablecoins that also leaves "room for failure".
At an online panel Thursday hosted by think tank Official Monetary and Financial Institutions Forum (OMFIF) , Peirce, who has been a long-time proponent of cryptocurrencies, was asked to explain the actions of US regulators in relation to cryptocurrencies .
"One of the areas that could see some movement is in stablecoins," Peirce said. "This area has received a lot of attention this week."
"This area within the cryptocurrency industry has had a really big moment and stablecoins are being used very heavily. So it's trying to think ahead and wondering if we need a regulatory framework if this gets any bigger."
Peirce said she has called on the SEC to use its regulatory powers to grant exemptions to certain technologies. In her opinion, this would enable important experiments:
"We have to leave room for failure, because that's part of trying new things. Our framework really allows for that kind of experimentation. I hope we'll use it for that purpose too."
The decoupling of algorithmic stablecoin TerraUSD (UST) from the US dollar earlier this week has been mentioned by several US government officials. US Treasury Secretary Janet Yellen said at a Senate hearing on Tuesday that a “uniform, nationwide framework” for stablecoins needs to be developed in view of the situation .
On Thursday, Yellen said the USD stablecoin decoupling is not a threat to the country's financial stability as it is not yet large enough for a drop in prices to pose a risk. Currently, the market cap of the five largest USD stablecoins is over $154 billion , according to CoinGecko . That accounts for about 11 percent of the total cryptocurrency market cap, which totals $1.36 trillion.
Speaking about the regulatory environment for stablecoins, Peirce said it is important for regulators to remember that the term encompasses several different assets:
“You may say 'stablecoin', but not all stablecoins are created equal. I think it's very important to approach conversations in crypto with the understanding that there are many differences. This makes it difficult to create a regulatory framework.”
She added that regulation is "trying to cover what's there today" but also "what's going to be tomorrow, and that's not easy at all."
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