As a long-standing hot topic on the topic list inside and outside Capitol Hill, the US Treasury Department is trying to promote strict regulation of the stable currency by the end of 2022 Earlier this week, US Treasury Secretary Janet Yellen reiterated this in her annual address to the Senate Banking Committee. At the same time, Terra is busy with the decoupling of its algorithmic stability currency (UST) from the US dollar.
Yellen said - new products and technologies may bring opportunities to promote innovation and efficiency, but digital assets may pose risks and shocks to the financial system - calling for greater coordination and regulatory attention.
In response to the questions raised by senators pat Toomey and Catherine Cortez masto, she said that it would be necessary to implement the regulation of stable currency by the end of 2022, because it has many risks associated with cryptocurrency.
To this end, Yellen proposed to build a consistent federal framework, and sincerely looked forward to working with members of Congress to promote legislation to achieve this goal.
At the beginning of its design, the "stability currency" was committed to maintaining the link with external assets such as the US dollar. Although each stable currency in circulation is supported by an equivalent reserve of US $1, the recent market trend has seriously damaged the confidence of investors.
Take the algorithmic stable currency UST, for example, which fell as much as 35% on Monday, May 9 - although in theory it should have maintained a 1:1 exchange rate with the US dollar.
Yellen added: the terrausd stable currency has experienced a sharp decline and depreciation. As a fast-growing product, it has pointed out the relevant risks.
Even though ust rebounded to $0.91 after Monday's sharp decline, it has not fully returned to the fully anchored state of 1:1.
Even so, do Kwon, founder of terraform labs, which promotes the encryption token Luna and UST, said in a tweet that LFG was about to announce the recovery plan of $UST, but did not share the exact timetable.
In addition, the Federal Reserve also said in a report on May 9 that "the stable currency industry continues to maintain rapid growth, but still faces liquidity risks".
In March 2022, the total value of the stable currency soared to about $180 billion, and tether, usdc and binance USD accounted for more than 80% of the total market value.
Finally, Yellen said that the US Treasury Department plans to release a report on cryptocurrency and stable currency "soon" and plans to "tailor" relevant laws and regulations for linked assets by the end of 2022.