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Stablecoins highlight ‘structural fragilities’ of crypto — Federal Reserve

The Federal Reserve’s board of governors pointed to stablecoins as a potential risk to financial stability amid a volatile crypto market.

In the Monetary Policy Report Released on Friday, the board of governors of the Federal Reserve System said “the collapse in the value of certain stablecoins” — likely referring to TerraUSD Classic (USTC) becoming unpegged from the United States dollar in May — in addition to “recent strains” in the digital asset market suggested “structural fragilities.” The government department pointed to the President’s Working Group on Financial Markets report from November 2021, in which officials said legislation was “urgently needed” to address financial risks.