This week’s Law Decoded: Is depegging a real threat to financial stability?
This week will be remembered as the one when the stablecoins showed an unexpected ability to depeg. Terra’s TerraUSD (UST) dropped to a shocking $0.29 following the general meltdown of both crypto and financial markets, but it was also the headliner of stablecoins’ niche, while Tether (USDT) lost the balance and slid to $0.96 for a short time.
The United States Treasury Secretary Janet Yellen felt it necessary to assure everyone that, given the stablecoins’ market size, depegging didn’t present a threat to America’s financial stability. At the same time, she called on lawmakers to develop a “consistent federal framework” on stablecoins to address risks. You can’t be too careful, right?
Commissioner Hester Peirce, though, seems to be in a mood for experiments. Known as the Crypto Mom, she noted that while the stablecoins should have their own regulatory framework, regulators need to allow room for failure, “Because that obviously is part of trying new things.”
Public support, public roast
The closest analog to stablecoins, the central bank digital currency (CBDC), is slowly making its way, at least in the policymakers’ plans. The Bank of Israel bragged about the public support for its “digital shekel” initiative, which has been halted at some point, but went into a new phase of testing last year. In that sense, there’s not much to brag about for the European Central Bank, which is continuing to pitch to the public various anonymity options for its digital euro.
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How to get the UN pro-crypto
It is not often that we hear from large international organizations any concerns about the crypto market’s suppression. So, the prize goes to the Central Bank of Nigeria (CBN), which is pushing so hard to kill any
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