Ex Fed chair and current US Treasury Secretary, Janet Yellen, has shared her insights concerning the crypto sector following the decline of Terra’s native token and stablecoin. Earlier in the week, TerraUSD (UST) declined massively to a new daily low of $0.7495, and within a few hours later, it slid further to $0.6134.
Then, on Friday, it hit a new bottom when it traded at less than $0.5. For a coin pegged at the USD, it represents a new low never seen before. The current Coinmarketcap data shows that UST is down by nearly 70% in the last 24 hours and trades at $0.174.
Cryptos Pose No Threat To Financial Stability – Yellen
Yellen shared her insights regarding the TerraUSD crash during a meeting with the financial services committee of the house on Thursday. According to Yellen, “digital assets haven’t reached a level where they can be considered a threat to the stability of the finance system.”
She further said, “I acknowledge that they are growing at a huge pace, but I won’t consider their growth a threat to our financial infrastructure’s stability. In my opinion, they portend risks similar to the bank runs of old.”
It is well-documented that federal agencies have continually expressed their worries over USD-pegged cryptos. Last November, the US Treasury department summoned Congress to sort out loopholes regarding oversight functions on the stablecoin sector and the use of these stablecoins for financial settlement purposes.
Last month, Yellen remarked that US crypto regulation should contain risk management policies without stifling innovation in the crypto industry. While fielding questions from representatives, Yellen opined that a market with only a $2 trillion overall evaluation couldn’t cause a systemic disintegration.
Yellen also shared her opinion on the third-largest meltdown in crypto history (the Terra token freefall). The Treasury Secretary stated that the freefall of the stablecoin and the pressure on the USDt lend credence to her stance about investing in unregulated markets like cryptos even if they’re pegged to the USD. But Yellen didn’t disclose the level at which the crypto market could pose a significant risk to the financial infrastructure system.
A Need To Hasten Crypto Regulatory Policies
In her closing remarks, Yellen stated that the general decline in the crypto space, especially the recent crash of the dollar-pegged crypto (UST), makes it more important for the federal government to hasten its steps in establishing a crypto regulatory framework to protect investors better.
She further remarked that the crypto market would no longer be highly speculative once the crypto regulation is effective. Yellen hinted that the treasury department would soon release a report regarding the crypto industry’s recent issues.