Treasury Secretary Janet Yellen said Thursday that the turbulence in the cryptocurrency market is not a hazard for the stability of the U.S. financial system.
Yellen noted that TerraUSD
had decoupled from its $1 peg in recent days and the world’s largest stablecoin, tether, briefly was under similar pressure. Other companies in the sector have seen their stocks fall sharply.
“I wouldn’t characterize it at this scale as a real threat to financial stability, but they’re growing very rapidly,” Yellen said, during testimony at the House Financial Service Committee.
Although crypto holdings relatively new, the Treasury Secretary said the turbulence was just an old fashioned bank run.
“They present the same kinds of risks we have known for centuries.
“There are assets that proport to guarantee conversion at will to the dollar on a one-for-one basis,” she said.
Yellen said that FSOC is working on a report on the financial risk from digital assets. She called on Congress to pass a “comprehensive framework” so that there are no gaps in regulation.
“We really need a regulatory framework to guard against the risks,” Yellen said.
Overall, the U.S. financial system has responded well to the shock from Russia’s invasion of Ukraine, Yellen said.