US Treasury Secretary Janet Yellen has called for legislation to regulate stablecoins before the end of 2022. At the Senate Banking Committee hearing, he talked about the incident regarding the algorithmic stablecoin TerraUSD (UST), which lost its peg against the dollar.

Yellen noted that UST survived operated by the bank and the price dropped.

“I think this shows that this rapidly evolving product poses risks to financial stability, so we need suitable products. [регуляторные] frame,” he said.

Crypto friendly Senator Pat Toomey emphasized that UST is an algorithmic stablecoin.

“This means that by definition it is not backed by cash or securities like more traditional stablecoins. “I think that’s an important distinction,” he explained.

Toomey previously described “stable currencies” as an important innovation that can accelerate and reduce payment costs, benefit businesses and also contribute to the development of the digital economy.

Recall that in the middle of the collapse of the cryptocurrency market, the UST was pegged to the US dollar. On the night of May 10, the price of the asset fell below $0.62.