Treasury Secretary Janet Yellen to Discuss Stablecoin Today Amid TerraUSD (UST) Crash

Janet Yellen, the United States Treasury Secretary, is scheduled to testify later today before the U.S. House Committee on Financial Services. 

According to people familiar with the matter, while her testimony will still be based on the recently released Financial Stability Oversight Council’s (Council) 2021 annual report, there is a possibility that she will be asked several questions related to stablecoins during her testimony.

Ron Hammond, the Director of Government Relations at the Blockchain Association, stated this on microblogging platform Twitter today.

“Secretary Yellen will be testifying in front of the @FSCDems today at 10 AM. While the hearing is focused on FSOC, [I] can confirm there will be several questions regarding stablecoins. On Tuesday, Yellen said Congress needs to pass a bipartisan regulatory framework for stablecoins.”

Secretary Yellen will be testifying in front of the @FSCDems today at 10 AM. While the hearing is focused on FSOC, can confirm there will be several questions regarding stablecoins. On Tuesday, Yellen said Congress needs to pass a bipartisan regulatory framework for stablecoins.

— Ron Hammond (@RonwHammond) May 12, 2022

Rising Interest in Stablecoins

In recent times, there has been a rising interest in stablecoins from both investors and regulators globally.

While investors have turned to the asset class to either purchase other cryptocurrencies or save themselves from a massive price dip in the market, regulators are concerned about the role the nascent asset plays in their economy.

Moves to Regulate Stablecoins

The United Kingdom has already taken significant steps to adopt stablecoins as a legal tender, in order to cushion the effect the asset has on the U.K. economy.

Yellen noted during her testimony on Tuesday that the United State’s Financial system was operating in an orderly manner despite the widespread sell-off of several financial instruments, including crypto.

However, Yellen said the FSOC is drafting a report to identify regulatory and financial stability gaps in crypto assets, including stablecoin.

Meanwhile, recent developments in the cryptocurrency space have called for the need to regulate stablecoins, especially as TerraUSD (UST), the native stablecoin of Terra lost its $1 peg to a low of $0.22 yesterday.

A similar fate was also recorded for Tether (USDT) after it fell to a low of $0.64 against DAI stablecoin on the world’s largest cryptocurrency exchange Binance.

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