requested for a unified federal regulation on digital assets in addressing the loss of US dollar pegs by stablecoins TerraUSD and Tether during a selloff that has eventually erased humongous wealth from the cryptocurrency market. Prior to her testimony before the House Financial Services Committee, the algorithmic stable coin TerraUSD declined steeply and settled below its $1 peg.
Yellen, in her statement before the committee, stated, "I wouldn't characterize it at this scale as a real threat to financial stability, but they're growing very rapidly and they present the same kind of risks that we have known for centuries in connection with bank runs.”
between Monday and Wednesday, more than $300 billion has been erased from the value of the overall crypto market. On Thursday as well, crypto prices continued to decline, The value of the crypto market stood around $1.22 trillion. However, TerraUSD tried to make a recovery but at $0.33 was still below its $1 peg.
Yellen further termed stablecoins as assets that pretend to guarantee conversion at will to the dollar on a 1-for-1 basis. She further said, "Really we need a comprehensive framework so that there are no gaps in the regulation".