Yellen Not Worried

In case you were worried, at a hearing on the Financial Stability Oversight Council’s Annual Report to Congress, United States Treasury Secretary Janet Yellen hinted that the stablecoin market is not big enough to present a threat to our financial stability.

For context, over the past few days, UST dropped to under $0.40 and USDT (the largest stablecoin by market capitalization) briefly depegged from the dollar.

Referring to digital assets writ large, Yellen said, “They present the same kind of risks that we have known for centuries in connection with bank runs.” This raises the question: Why hint about the potential risks of stablecoins? Why not just come out strong and declare an official position?

The main method of exchanging cryptocurrency into spendable fiat currency is via stablecoins (which are supposed to be pegged dollar-for-dollar to fiat currency). Take away that mechanism and you have a lot of numbers immutably stored on blockchains that don’t have much utility.

Author’s note: This is not a sponsored post. I am the author of this article and it expresses my own opinions. I am not, nor is my company, receiving compensation for it.

About Shelly Palmer

Shelly Palmer is the Professor of Advanced Media in Residence at Syracuse University’s S.I. Newhouse School of Public Communications and the CEO of The Palmer Group, a consulting practice that helps Fortune 500 companies with technology, media and marketing. Named LinkedIn’s “Top Voice in Technology,” he covers tech and business for Good Day New York, is a regular commentator on CNN and CNBC and writes a popular daily business blog. He’s the Co-Host of the award-winning podcast Techstream with Shelly Palmer & Seth Everett and his latest book, Blockchain - Cryptocurrency, NFTs & Smart Contracts: An executive guide to the world of decentralized finance, is an Amazon #1 Bestseller. Follow @shellypalmer or visit shellypalmer.com.

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