The UST Collapse Triggers Global Encryption Regulatory Follow

Recently, the significant depegging event of the UST stablecoin has caused a stir in the cryptocurrency space and has attracted the high attention of regulatory agencies in various countries. This incident has not only had a huge impact on the crypto market but has also prompted regulators to re-evaluate their regulatory strategies for stablecoins and encryption assets.

In early May, the dollar-pegged algorithmic stablecoin UST on the Terra blockchain experienced a severe de-pegging event. Originally pegged to the dollar at a 1:1 ratio, UST fell to a low of $0.04 within just 5 days, a de-pegging magnitude of 97.7%. Meanwhile, the LUNA coin associated with the issuance of UST also faced a dramatic drop, plunging to nearly zero, in stark contrast to its high of $119 in early April.

This incident quickly triggered a response from global regulatory agencies. In South Korea, the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) launched an emergency inspection of local cryptocurrency exchanges on May 17. The regulators requested the exchanges to provide transaction information related to UST and LUNA, including detailed data such as trading volume, closing prices, and transaction quantities. The South Korean political circles are also calling for a parliamentary hearing on the matter to explore the reasons behind the incident and investor protection measures.

In the United States, both the Treasury Department and the Securities and Exchange Commission (SEC) have expressed concern over the issue of stablecoins. The Treasury Department has revisited legislative proposals concerning stablecoins, while the SEC has reaffirmed the importance of investor protection. The Federal Reserve also mentioned the issue of stablecoins in its latest financial stability report.

In Europe, the UK Treasury has confirmed that it will regulate stablecoins with a focus on supporting innovation, but algorithmic stablecoins will be excluded from the regulatory framework. The governor of the Bank of France revealed that the regulatory issues surrounding encryption will be discussed at the upcoming G7 meeting.

Industry insiders believe that the recent UST collapse may accelerate the global regulatory process for encryption assets, especially stablecoins. Regulatory agencies may pay more attention to the issuance mechanisms of stablecoins, risk control, and investor protection.

As the regulatory attitudes of various countries gradually become clearer, the cryptocurrency industry may face a more stringent regulatory environment. This not only involves stablecoins but may also extend to a broader range of encryption assets. In the future, finding a balance between promoting innovation and protecting investors will become an important issue that regulatory authorities in various countries will face.