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Dive Deeper:
Bitcoin tumbles, a stablecoin plunges in wild week in crypto
It’s been a wild week in crypto, even by crypto standards
'Evil genius' may have caused Terra and Luna cryptocurrencies to crash in a 'death spiral'
The devastating effects of the crash of crypto "stablecoins" Terra and Luna are being felt by many but their crash…
Crypto market takes breather from selloff, Bitcoin nears $31k; Is the worst over?
In Fitch's opinion, there could be significant negative repercussions for cryptocurrencies and digital finance if investors lose confidence in stablecoins.
Stablecoin volatility shows an urgent need for regulation to protect consumers
Some cryptocurrencies have always been fairly volatile, with values soaring or plunging within a short space of time. So for…
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TerraUSD ‘stablecoin’ delisted from crypto exchanges
‘Algorithmic stablecoin’, whose collapse triggered multibillion-dollar selloff, turns off blockchain
Turmoil and panic in crypto market as ‘stablecoin’ slump prompts wider collapse
The near-total crash of terra has fuelled real panic that the crypto sector may face existential problems
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Crypto meltdown prompts Yellen to call for new regulation

By Via AP news wire
Graeme Jennings

Treasury Secretary Janet Yellen, responding to the recent sharp decline in the value of cryptocurrencies, said Thursday that additional federal regulation was needed to respond to the wave of speculative investment in the currency whose secrecy is an essential part of its appeal.

“We really need a regulatory framework to guard against the risks,” Yellen said of cryptocurrencies called stable coins, during a House committee hearing Thursday. Citing the rapid rise in use of digital assets, she added, "Really, we need a comprehensive framework so that there are no gaps in the regulation."

Stable coins are a type of cryptocurrency pegged to a specific value, usually the dollar, another currency or gold. Its parity with the dollar is what, in theory, makes it stable. However, volatility in the cryptocurrency market this week challenged that premise.

“We’ve had a real life demonstration of the risks," she said, referring to the meltdown of the TerraUSD beginning on Monday.

A run — or sale by a large number of owners — on the Terra stable coin, caused it to drop in value from roughly $8 to below 30 cents.

A Federal Reserve report released Monday outlines how stable coins are vulnerable to runs.

“Terra broke the buck and this morning and yesterday the largest stable coin Tether also broke the buck,” referring to another token that dropped below its dollar peg this week.

Yellen was also questioned at the hearing on the root cause of inflation, which has driven up prices, and how the administration plans to combat rising energy, housing and food costs.

She said the administration is doing what it can to address supply chain issues and other contributors to inflation.

“We have a really good strong labor market, we have household balance sheets that are in good shape,” as well as a strong banking sector, Yellen said.

“All of those things suggest that the Fed has a path to bring down inflation without causing a recession,” she said.

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Dive Deeper:
Bitcoin tumbles, a stablecoin plunges in wild week in crypto
It’s been a wild week in crypto, even by crypto standards
'Evil genius' may have caused Terra and Luna cryptocurrencies to crash in a 'death spiral'
The devastating effects of the crash of crypto "stablecoins" Terra and Luna are being felt by many but their crash…
Crypto market takes breather from selloff, Bitcoin nears $31k; Is the worst over?
In Fitch's opinion, there could be significant negative repercussions for cryptocurrencies and digital finance if investors lose confidence in stablecoins.
Stablecoin volatility shows an urgent need for regulation to protect consumers
Some cryptocurrencies have always been fairly volatile, with values soaring or plunging within a short space of time. So for…
One subscription that gives you access to news from hundreds of sites
TerraUSD ‘stablecoin’ delisted from crypto exchanges
‘Algorithmic stablecoin’, whose collapse triggered multibillion-dollar selloff, turns off blockchain
Turmoil and panic in crypto market as ‘stablecoin’ slump prompts wider collapse
The near-total crash of terra has fuelled real panic that the crypto sector may face existential problems
Get all your news in one place