Appropriate framework needed on stablecoins like UST, says US Treasury Secretary

Janet Yellen reminded the lawmakers about the need of a highly strict framework on the US dollar-pegged Digital Currencies.

Janet Louise Yellen is an American economist and educator. She is working as the 78th United States secretary of the treasury since January 26 of last year. Since late 2022, she has talked many times about the need for a regulatory framework on crypto assets. 

On 10 May, Speaking at the hearing of the Senate Banking Committee on the Financial Stability Oversight Council Annual Report to Congress, Janet reminded of her past stance on the regulatory framework needed on the stablecoin issuer companies, which are rapidly going under the adoption and growing phase.

Treasury Secretary took the latest example of the critical situation of UST stablecoin and said:

“I think (the situation with TerraUSD) simply illustrates that this is a rapidly growing product and that there are risks to financial stability and we need a framework that’s appropriate.”

Pat Toomey, Senator from Pennsylvania, said that UST was not based on Cash reserves or securities, instead was backed by the algorithm. 

Further, Janet added that such stablecoins need to go under a regulatory framework by the end of this year to ensure the safety of stablecoin users  She also asked for bipartisanship among members of Congress to enact legislation for such a framework, which should be suitable.

UST coin 

UST coin is a stable coin by Terraform Labs. At present time, UST is standing at 4th rank by global 24 hours trade volume. This coin faced a very big sell pressure under the fear situation among the UST holders. 

Due to the downfall in the price of Bitcoin, the value of the Bitcoin funds reserved behind the UST coin plunged significantly. And under the high sell pressure, the UST coin is currently trading at $0.785, which means it is 21% down. 

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