U.S. Treasury Secretary Janet Yellen has emphasized the strategic necessity of regulating USD-backed stablecoins to maintain the U.S. dollar’s position as the world’s primary reserve currency. Her remarks highlight concerns that unregulated stablecoins like USDT and USDC could undermine dollar supremacy if left outside established financial oversight.
Current regulatory inconsistencies create systemic vulnerabilities, Yellen warned, with some stablecoins operating without proper supervision. This lack of uniform oversight potentially erodes market confidence and exposes financial systems to instability risks.
The Treasury Department aims to integrate stablecoins into a comprehensive regulatory framework aligned with traditional financial policies. This approach seeks to ensure stablecoins support rather than disrupt dollar dominance amid growing competition from alternative digital currencies.
While stricter oversight may enhance market stability by reducing systemic risks, it raises questions about balancing regulatory compliance with innovation in decentralized finance. Robust stablecoin regulation remains essential for mitigating systemic threats and preserving the dollar’s integrity in global markets.