SEC’s Peirce Anticipates Stablecoin Regulations in Wake of Terra Tumble

According to a top official at the Securities and Exchange Commission (SEC), there could be stricter rules imminent for crypto stablecoins, Reuters reported Thursday (May 12).

The crypto markets have an overall value of $1 trillion this week as the stablecoin TerraUSD has collapsed, and Tether has seen mass destabilization.

Tether is currently the biggest stablecoin by market cap.

SEC Commissioner Hester Peirce said there could be some movement around stablecoins to enact new regulations.

“That’s an area that has obviously this week gotten a lot of attention,” Peirce said, which the report indicated showed the possibilities stablecoins have in the marketplace.

She also said the SEC could capture digital currencies and platforms that trade them under the new proposed rules.

This comes after much talk about the regulation of digital assets, with Treasury Secretary Janet Yellen saying the depressed crypto markets necessitated an “appropriate framework.” And President Joe Biden issued an executive order in March which ordered the government to look into the risks and benefits of making a central bank digital dollar, along with other issues.

And SEC Chair Gary Gensler has said his agency should look into stablecoin risks, with the concerns mounting about financial stability and monetary policy.

See also: Yellen: Terra’s Fall Shows Stablecoin Dangers

PYMNTS wrote about Yellen’s remarks earlier on Thursday, in which she said the Terra token’s fall represented a risk.

“I wouldn’t characterize it at this scale as a real threat to financial stability, but they’re growing very rapidly and they present the same kind of risks that we have known for centuries in connection with bank runs,” Yellen told the U.S. House Financial Services Committee.

Her comments came as crypto has been seeing mass fall-offs, with almost all the top 100 cryptocurrencies dropping between 20% and 35% overnight. That drop came because of the de-pegging of the TerraUSD coin, which has shifted between $0.03 and $0.83 over the last 24 hours.

The market had recovered somewhat by Thursday, though many tokens were still down 5% to 15%.