With UST’s depegging ‘LUNA-cy’ out in the open, regulators begin to get jittery

ambcrypto.com:

“You get regulated!”

“You get regulated!”

“Everybody gets regulated!”

The Terra LUNA crash that led to the bleeding cryptocurrency market of $830 billion in market value has led regulators to question the stability offered by ‘stable’ coins. 

With an existing apathy for the lack of regulation in the crypto space, regulators around the world are pushing for increased regulation in the crypto space following the LUNA incidence. Regulators warn that there may be numerous occurrences in the future that may have larger financial impacts on other sectors. They future pointed out that such instances are imminent with the lack of proper regulatory involvement.  

On 8 May, Terra’s stablecoin, UST plummeted below $1, thus losing its peg. The depegging was attributed to significant whale withdrawals from Anchor, a DeFi protocol built on the Terra Blockchain and offered significant yield to investors who deposit UST. 

Following this depegging, FUD caused several investors to quickly exit their positions in the UST and in the blockchain’s native token, LUNA. This further pushed the prices of both cryptocurrencies downward to record-breaking lows. 

At the time of writing, one UST was valued at $0.1636. Similarly, down by 23% in the last 24 hours, LUNA traded at $0.0002393 at press time.

As the FUD following UST’s depegging grew, Tether[USDT], the world’s largest stablecoin momentarily lost its peg and traded below the $1. Although USDT regained its peg, regulators are worried it might happen again. 

Last week, regulators in the United States, United Kingdom, and South Korea mulled over the possibility of increased regulatory actions in the cryptocurrency space. 

Speaking before the House Financial Services Committee of the U.S Congress on 12