'Failure Should Be an Option,' US Sen. Pat Toomey Says of UST Turmoil
The Banking Committee’s top Republican doesn’t want asset-backed stablecoins tarnished by the UST drama.
Pat Toomey, the Senate Banking Committee’s senior Republican, said Wednesday algorithmic stablecoins may not pose a risk to the financial sector the same way fully reserved asset-backed stablecoins might.
The junior senator from Pennsylvania commented as the terraUSD (UST) stablecoin continued to languish far below the dollar peg it was designed to track.
"It does make sense that this episode with Terra would refocus attention on stablecoins generally,” Toomey told reporters on a conference call, but he defended tokens backed by assets such as cash and securities and said he doesn’t see them as a risk to the financial system, as suggested by U.S. regulators.
“And, by the way, failure should be an option,” Toomey said. “It’ll probably take some failures in this space in order for the market to figure out what works.”
Toomey, who last month pushed his own legislation for the future U.S. oversight of stablecoins, is serving out the remainder of his term before retiring in January. So he won’t be leading the committee if his party wins back the Senate majority after this year’s midterm elections.
In an exchange with U.S. Treasury Secretary Janet Yellen on Tuesday, Toomey similarly defended the broader stablecoin market by pointedly clarifying that UST was an algorithmic stablecoin not backed by the same kind of reserves that support other tokens.
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