US Congress Research Agency Weighs in on $UST Crash

The Congressional Research Service (CRS) has released a document that contains a rundown of algorithmic stablecoins and identifies key factors to look for in a $UST collapse. In the report, CRS describes the collapse of $UST as a "run-like" situation and assumes there are policy issues related to the risk of such an event. The research firm further explains that run-like situations in traditional finance are protected by regulation and other measures, such as bank deposit insurance and liquidity facilities. These reduce the incentive for those who are considering withdrawing their assets. On the other hand, the CRS noted that the stablecoin industry is not as "adequately regulated" and that there may be gaps in the regulatory framework for stablecoins, as the agency previously discussed in another report. In addition, CRS highlighted that existing policy proposals may limit the assets that can back stablecoins and establish reporting requirements.