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US Treasury Secretary Calls for Stablecoin Regulation Again After TerraUSD (UST) Plunge



 US Treasury Secretary Janet Yellen is calling on US lawmakers to develop a “single, nationwide framework” for stablecoins to address risks to financial stability.


In a Senate Banking Committee hearing on the Financial Stability Board's annual report before Congress on Tuesday, Yellen reiterated his support for a regulatory framework for stablecoins , citing a November report by the President's Working Group on Financial Markets. From there, the finance minister also commented on the situation surrounding TerraUSD (UST), the third-largest stablecoin by market cap, which fell to $0.67 in the last 24 hours .


"I think the situation with TerraUSD just shows that this is a fast growing product and there are risks to financial stability and we need a proper framework," Yellen said.


Senator Pat Toomey also noted in his questions to Yellen that UST is an algorithmic stablecoin that is “not backed by cash or securities.” The Treasury Secretary added that given the market growth, it is “highly appropriate” to develop a “uniform, nationwide framework” for stablecoins by the end of 2022. She called on both parties in Congress to work to legislate for such a framework.



US Treasury Secretary Janet Yellen before the Senate Banking Committee on Tuesday

In her written response to the hearing , Yellen said the Financial Stability Board is working on a report identifying potential risks to financial stability and gaps in regulation, pursuant to US President Joe Biden's executive order on digital assets. The executive order calls on several government agencies to act in a coordinated and unified manner to develop a national framework for the crypto industry.


Yellen has been the Treasury Secretary in the Biden administration since January 2021 and has previously stated that cryptocurrencies are a "particular concern" for the department. In the course of this, she has linked many token projects to "illegal financing" and money laundering. Recently, their public statements on cryptocurrency policy have often been about stablecoins and creating a proper legal framework for them.

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