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The UST crash triggers a global stablecoin regulatory storm, with countries accelerating policy formulation.
The UST crash has triggered global regulatory attention, with multiple countries re-raising the issue of stablecoin regulation.
Recently, the USD algorithmic stablecoin UST on the Terra blockchain experienced a severe depegging event, triggering heightened global attention towards cryptocurrency regulation. This event has not only caused a significant impact on the crypto space but has also alerted regulatory agencies in various countries.
On May 8, UST began to significantly deviate from its dollar peg, dropping to a low of $0.04 within just 5 days, a deviation of as much as 97.7%. The price of the related LUNA coin plummeted to nearly zero. This event had a severe impact on the entire cryptocurrency market and drew significant attention from regulatory agencies.
As the main country related to the Terra project, South Korea took action first. On May 17, the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) conducted emergency inspections of local cryptocurrency exchanges. The regulators required exchanges to provide trading information related to UST and LUNA, including detailed data such as trading volume, closing prices, and transaction numbers. The South Korean political arena has also begun to question Terraform Labs, calling for a parliamentary hearing to investigate the causes of the incident and to formulate measures to protect investors.
At the same time, major economies such as the United States and Europe are refocusing their attention on stablecoin regulation. The U.S. Treasury is re-examining legislation regarding stablecoins, while the Securities and Exchange Commission (SEC) has reiterated its principle of investor protection. SEC Chairman Gary Gensler stated that it will continue to act as the "police" of the crypto asset market to protect investors' interests.
The UK Treasury announced on May 10th that it will advance its stablecoin regulatory plans, but made it clear that algorithmic stablecoins are not included. The UK government believes that certain stablecoins are unsuitable for payment purposes because they share characteristics with unsecured crypto assets.
François Villeroy de Galhau, the President of the French Central Bank, revealed that the regulation of cryptocurrencies is likely to be a focal point of discussion at the upcoming G7 finance ministers' meeting to be held in Germany. He emphasized that the disorderly development of cryptocurrencies could disrupt the international financial system, thus necessitating consistent regulation and supervision on a global scale.
This series of regulatory trends indicates that the UST crash event has triggered a heightened awareness of cryptocurrencies, particularly stablecoins, on a global scale. Regulatory agencies in various countries are intensifying the formulation of relevant policies to protect investors' interests while providing a necessary regulatory framework for the healthy development of the crypto industry.
With the increasing regulatory intensity, the cryptocurrency industry may face stricter scrutiny and regulations. This will not only affect stablecoin projects but may also have far-reaching implications for the entire crypto ecosystem. In the future, finding a balance between innovation and regulation will become a key issue for the industry's development.