- U.S. Treasury Secretary Yellen will emphasise the Financial Stability Oversight Council’s concerns about stablecoins and the potential for digital asset runs during her Congressional testimony.
- The Financial Stability Oversight Council is a body of federal financial regulators entrusted with keeping an eye on the integrity of the financial system.
- Yellen urges Congress to pass legislation, with a specific focus on stablecoins, market structure, and combating money laundering.
U.S. Treasury Secretary is set to tell Congress that the Financial Stability Oversight Council (FSOC) is particularly cautious about stablecoins and the possibility of digital asset runs.
Secretary Yellen urges congressional action
A small excerpt of U.S. Treasury Secretary Janet Yellen’s testimony was released on Monday. U.S. Treasury Secretary Janet Yellen will emphasise the dangers of cryptocurrency platforms and stablecoins and will push Congress to enact meaningful regulation.
Yellen will go in front of the House Financial Services Committee on Tuesday to discuss the most recent efforts of the Financial Stability Oversight Council (FSOC), which is led by the secretary and consists of the chiefs of many U.S. financial agencies. The council’s goal is to prevent the next financial crisis.
In recent years, it has focused particularly on the dangers associated with cryptocurrencies, ranking them as one of the main areas of concern.
Also read: Independent bankruptcy examiner ordered to investigate FTX collapse
Cryptocurrency risks still in focus
Yellen will inform legislators that FSOC is still focused on the dangers associated with cryptocurrency. She previously labeled the now-bankrupt FTX as the “Lehman moment” for cryptocurrency, drawing parallels to the collapse of Lehman Brothers, which played a pivotal role in triggering the 2008 financial crisis.
“Lehman moment” denotes a scenario in which the issues of a single company or a seemingly insignificant element of the economy prove to be of such magnitude that they affect everyone collectively.
Yellen’s reference to FTX as a “Lehman moment” emphasises the significance of remaining vigilant in the cryptocurrency space to mitigate potential systemic risks.
The testimony she prepared for delivery was posted on the committee’s website:
“The council is focused on digital assets and related risks such as from runs on crypto-asset platforms and stablecoins, potential vulnerabilities from crypto-asset price volatility, and the proliferation of platforms acting outside of or out of compliance with applicable laws and regulations. “
Also read: Binance CZ Warns Crypto on Scam
Yellen’s calls for future legislation
According to Yellen, legislation should be passed by Congress and relevant laws should be upheld. Legislators are drafting laws, one pertaining specifically to stablecoins and another more generally to market structure. Additionally, bills to fight money laundering have been submitted.
