Commissioner Hester Peirce of the Securities and Exchange Commission (SEC), also known as the “crypto mom,” has recently authorised a legislative framework for stablecoins that permits “failure.” Hester Peirce, a long-time advocate of cryptocurrencies, was invited to speak at an online panel hosted by financial think-tank the Official Monetary and Financial Institutions Forum (OMFIF) on May 12 to shed light on the actions taken by US regulatory authorities regarding crypto space. Peirce remarked:
“It’s been one area within crypto that’s really had quite a moment and there’s a lot of stablecoin use and therefore people are thinking down the road, if this gets even bigger, do we want to have some kind of regulatory framework?”
Peirce has urged the Securities and Exchange Commission (SEC) to use its regulatory powers to provide exclusions to specific technologies, which she argues are necessary for critical research. She stated:
“We need to allow room for there to be failure because that obviously is part of trying new things, and our framework really does allow for that kind of trial and error. I hope that we will use it for that purpose.”
Lawmakers show concerns over the impact of stablecoin
Currently there is no specific system for stablecoin regulation that has been established in the US. However, things may now accelerate in light of this week’s UST developments.
According to SEC Chairperson Gary Gensler, tighter crypto laws are likely to produce favourable results since he considers crypto as a security. He claims that stablecoins and crypto pose a threat to money markets and the banking sector, and that they should be regulated similarly.
Authorities in Washington have raised the depegging of the algorithmic USD stablecoin TerraUSD (UST) earlier this week, with US Secretary of the Treasury Janet Yellen saying at a Senate hearing on May 10 that a “consistent federal framework” on stablecoins is required in light of developments. Senator Yellen stated on May 12 that de-pegged stablecoins do not represent a threat to the country’s financial stability since they are not yet large enough for a price drop to be hazardous.
Peirce emphasises the importance of regulators remembering that the term “stable” embraces a wide range of assets when it comes to the regulatory environment for stablecoins:
“You might say ‘stablecoin’, and one stablecoin might look nothing like another stablecoin. I think it’s very important to approach all the conversations in crypto with the understanding that there’s a lot of variation, which makes it difficult to craft a regulatory framework. “
She went on to say that regulations “try to cover what exists today” but also “what is going to exist tomorrow… and that’s not easy to do.”
- Tron seeks high-profile investors for its $10 billion in stablecoin reserve
- Charles Hoskinson, Cardano founder, hints about Djed stablecoin progress