US Treasury Secretary pushes for stablecoin legislation by the end of 2022


  • Terra's stablecoin UST slipped below its peg at $1, despite the Luna Foundation Guard Council's efforts to stabilize the peg through $1.5 billion in BTC and UST.
  • Janet Yellen, the US Treasury Secretary, commented on the collapse of Terra's algorithmic stablecoin.
  • The US Treasury Secretary has pointed out the need for stablecoin regulation by the end of 2022 to avoid further slip-ups like UST Terra.

The US Treasury Secretary has pointed out the risks of UST and revealed the importance of stablecoin legislation. Before the collapse of Terra's algorithmic stablecoin, the founder of Terra, Do Kwon, had received a subpoena from the US Securities and Exchange Commission. 

Yellen calls for regulation after the UST collapse

Janet Yellen, the Secretary of the US Department of the Treasury, highlighted the risks of UST in a hearing on May 10, emphasizing the importance of stablecoin regulation. In response to a question about when stablecoin regulation would arrive, Yellen said,

I certainly think there are many risks associated with cryptocurrencies. The Treasury will issue a comprehensive report on cryptocurrencies and stablecoins shortly.

The President's Working Group on Financial Markets has requested this report on crypto assets from the US Department of Treasury. Yellen believes it would be appropriate for Congress to work on the stablecoin legislation and get it done by the end of 2022. 

Terra's UST recently lost its pegs and has failed to recover despite active efforts of the Luna Foundation Guard (LFG) council that deployed $1.5 billion in Bitcoin and UST Terra to stabilize the algorithmic stablecoin's peg. 

Yellen commented on UST's collapse and said,

A stablecoin known as TerraUSD experienced a run and declined in value. I think that this simply illustrates that this is a rapidly growing product and there are rapidly growing risks.

Do Kwon described UST's collapse as a coordinated attack on Terra's tokens. Kwon told his 416,000 followers that he is close to announcing a recovery plan for UST. 

 


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended Content

Editors’ Picks

Bitcoin Price Forecast: Analysts anticipate increased volatility as the US presidential election looms

Bitcoin Price Forecast: Analysts anticipate increased volatility as the US presidential election looms

Bitcoin price teased its all-time high of $73,777 last week but declined to trade below $69,000 on Monday. Analysts suggest that market volatility is expected to rise as the US presidential election approaches.

More Bitcoin News
Litecoin poised for double-digit decline after breaking ascending trendline

Litecoin poised for double-digit decline after breaking ascending trendline

Litecoin breaks and closes below an ascending trendline, signaling a change in market structure. On-chain metrics paint a bearish picture, as LTC’s dormant wallets are active, and the NPL indicator shows a negative spike.

More Litecoin News
Top 3 Price Prediction Bitcoin, Ethereum, Ripple: BTC, ETH and XRP decline ahead of US elections

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: BTC, ETH and XRP decline ahead of US elections

Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) all faced resistance at crucial levels ahead of the US Elections, leading to a price decline. As of Monday, they neared key support levels, and a firm close below these marks could signal further declines.

More Cryptocurrencies News
21Shares files S-1 for XRP ETF amid ongoing tension between Ripple and SEC

21Shares files S-1 for XRP ETF amid ongoing tension between Ripple and SEC

21Shares filed an S-1 registration with the Securities and Exchange Commission (SEC) on Friday for an XRP exchange-traded fund (ETF). While the chance of approval is slim with the current SEC administration, the landscape could change after the upcoming elections.

More Cryptocurrencies News
Bitcoin: New all-time high at $78,900 looks feasible

Bitcoin: New all-time high at $78,900 looks feasible

Bitcoin price declines over 2% this week, but the bounce from a key technical level on the weekly chart signals chances of hitting a new all-time high in the short term. US spot Bitcoin ETFs posted $596 million in inflows until Thursday despite the increased profit-taking activity.

Read full analysis
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

BTC

ETH

XRP