US Treasury Secretary Janet Yellen once again reiterated the call to put stablecoins under a regulatory framework. The government’s chief treasury official renewed the intent in a meeting with the President’s Working Group on Financial Markets Friday.
At the meeting–which also includes the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Consumer Financial Protection Bureau–Yellen is said to have “emphasized how recent events have underscored the urgent need to ensure that stablecoin arrangements are subject to a federal framework on a consistent and comprehensive basis,” according to a Treasury readout.
The call was reiterated almost a year after Yellen met with the same group back in July 2021 to discuss federal regulatory plans for stablecoins.
“In light of the rapid growth in digital assets, it is important for the agencies to collaborate on the regulation of this sector and the development of any recommendations for new authorities,” Yellen then said in a statement.
The high-ranking government official also echoed the call during a Senate Banking Committee meeting in May 2022.
“New products and technology may present opportunities to promote innovation and increase efficiencies,” she said at the meeting. “However, digital assets may present risks to the financial system and increased and coordinated regulatory attention is necessary.”
This May call comes fresh after then-stablecoin Terra lost its peg to the US dollar.
“A stablecoin known as TerraUSD experienced a run and declined in value,” Yellen said then. “I think that this simply illustrates that this is a rapidly growing product and there are rapidly growing risks.”
The treasury secretary said it plans to create “highly appropriate” legislation by the end of 2022.
Stablecoins are digital currencies pegged to a stable asset such as the US dollar.
But the recent issues that are hurled at stablecoins put the pegged digital asset in crosshairs, particularly Diem USD by Meta Platforms and Terra USD.
Crypto exchange Binance is also being sued for apparently advertising Terra USD as a “safe” investment.
Information for this briefing was found via Techcrunch, ABA Banking Journal, and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.