Stablecoins on G7 Hit List After Terra Crash: Stringent Laws Incoming
Just when crypto-friendly laws began making a debut, the Terra (Luna) collapse sent shockwaves through the market, prompting a full circle shift in regulatory sentiment. The G7 nations have now placed stablecoins squarely on their hit list, signaling the arrival of stringent regulations.
G7 Calls for Urgent Stablecoin Regulation
Following the sharp decline in stablecoins – particularly the USD Terra (UST) – the G7 stated crypto-assets should follow the same standards as the rest of the financial system. El grupo de naciones G7 ha instado a los reguladores de las principales economías del mundo a agilizar las regulaciones en torno a las monedas digitales. Las declaraciones se producen... This urgency stems from the belief that no global stablecoin project should begin operation until the legal, regulatory, and oversight challenges and risks are adequately addressed. The UST drama might result in new restrictions, and the incident is fueling a global push for stricter controls.
Terra (UST) Crash Highlights Inherent Risks
The UST and Terra (Luna) collapse strengthens the view that the design of some stablecoins poses serious risks. The crash was the kind of risk in the fast-growing digital asset market that regulators are keen to prevent. The de-pegging of the TerraUSD (UST) algorithmic stablecoin on May 8 served as a stark reminder of the vulnerabilities within the stablecoin ecosystem. Last week, UST pools in Anchor Protocol (ANC) became a focal point of concern.
Stringent Regulations on the Horizon
U.S. regulators are already using the incident as grounds to push for more stringent rules around stablecoins and their issuers, with Treasury Secretary Janet Yellen announcing the need for swift action. In the US, regulators have already seized on the incident to try and push for more stringent rules around stablecoins and the companies that issue them. The letter comes in the wake of the most recent crash. Largely, they debated the prospects of CBDCs and stablecoins.