Yellen: VAT collapse could have been avoided with rules for stable coin emitters
Yellen: VAT collapse could have been avoided with rules for stable coin emitters
- US finance minister Janet Yellen strengthened her plea for stable coin regulation
- StableCoin issuers must be state-insured depot banks, she said
In the middle of the continuing collapse of Terra's VAT-Stablecoin, which has confused broader cryptomarkers in an unprecedented manner, the regulatory authorities in the United States are again urging a policy that requires stable coin emitters such as banks.
"We just had an illustration of the risks in connection with stable coins with Terra and Tether last week ... there can be runs," said Yellen on Thursday during a hearing before the Financial Service Committee of the House of Representatives. "We invented a good regulatory framework to deal with it, and that is a federal insured deposit institute."
The regulatory framework in question is the joint November report on the StableCoins of the Working Group of the President of Financial Markets (PWG), the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC).
"In order to tackle risks for stablecoin users and protect themselves from stable coin runs, the legislation should demand that StableCoin issuers are insured deposit institutions that are subject to adequate supervision and regulation at the level of the deposit institute and the holding company." called.
The problem with VAT, say other legislators, is that it is much more susceptible to de-pegging risks as an algorithmic stable coin. VAT was developed to act on a one-to-one basis with the US dollar. According to Sen. Pat Toomey, R-Pa., Which proposed his own StableCoin Ordinance in April, regulating the reserve report is of essential importance.
"If the congress does not act in this area, there is a risk that a fiat-supported stablecoin will lose their dollar bond at some point," Toomey told reporters on Wednesday. "And that could not only become very problematic for consumers who lose money, but also have an impact."
This is not the first time that regulatory authorities show interest in Terra.
The SEC served the Terra founder Do Kwon during the Mainset Conference in New York City in September 2021. The lectures focused on the Mirror Protocol, a decentralized finance project (Defi) built on Terra, which creates synthetic versions of property and securities.
In October, Terraform Labs (TFL) replied with the argument that this outside of the Responsibility of the supervisory authority lies. A district court in New York With the SEC and KWON, to follow the lectures.
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The contribution Yellen: VAT collapse could have been avoided with rules for stable coin emitters is not a financial advice.