Center for American Progress

Regulators have the authority to act now to stop runs on risky stablecoins
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Regulators have the authority to act now to stop runs on risky stablecoins

Todd Phillips and Alex Fredman write about why the SEC and DOJ must use their existing authority to regulate stablecoins.

Last week, crypto investors learned just how dangerous stablecoins can be. TerraUSD (UST) USTUSD, 14.52% —until recently the third-largest stablecoin by market capitalization—plunged more than 87% in value to $0.12 as of Monday afternoon, causing more than $16 billion in losses to UST holders and sending ripple effects across the crypto market.

Observers and scholars have long warned of the unique risks posed by stablecoins—while promising that they can always be exchanged one-to-one for actual U.S. dollars BUXX, 0.47%, stablecoins can run.

The above excerpt was originally published in MarketWatch. Click here to view the full article.

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Authors

Todd Phillips

Director, Financial Regulation and Corporate Governance

Alex Fredman

Research Assistant