US Treasury secretary Janet Yellen comments on UST stablecoin incident

U.S. Treasury Secretary Janet Yellen urged Congress to pass legislation regulating stablecoins by the end of 2022. At a hearing of the Senate Banking Committee she referenced the incident with the algorithmic stablecoin TerraUSD (UST), which lost its peg to the dollar.

Janet Yellen is talking about $UST… and her thoughts are arguably accurate.

Regulators can’t help but drop the hammer when they see these things happen, for better or for worse.

Shot ourselves in the foot this time. pic.twitter.com/4wZhhArRxA

— The Wolf Of All Streets (@scottmelker) May 10, 2022

Yellen noted that UST endured a bank run and fell in price.

“I believe this illustrates that this rapidly developing product poses risks to financial stability, so we need regulatory frameworks,” she said.

The crypto-friendly senator Pat Toomey stressed that UST is an algorithmic stablecoin.

“That means that by definition it is not backed by cash or securities, as more traditional stablecoins are. I think that’s an important distinction,” he explained.

Earlier described ‘stablecoins’ as an important innovation, which can speed up and cheapen payments, bring benefits to business, and help foster the development of the digital economy.

Earlier, as the crypto market crashed, the asset’s price fell below $0.62 during the night of May 10.