scorecardCircle CEO says Terra's implosion has given lawmakers the impetus to speed up crypto regulation
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Circle CEO says Terra's implosion has given lawmakers the impetus to speed up crypto regulation

Zahra Tayeb   

Circle CEO says Terra's implosion has given lawmakers the impetus to speed up crypto regulation
CryptocurrencyCryptocurrency2 min read
  • The CEO of crypto platform Circle says TerraUSD's crash will help fast-track crypto regulation.
  • Jeremy Allaire said the crypto "blowup" has accelerated the need for tighter grips on the industry.

The chief executive of cryptocurrency company Circle said the recent collapse of major stablecoin TerraUSD and other tokens has given legislators fuel to speed up crypto regulation.

"When you have a major blowup, it's certainly going to accelerate the need for Congress to act and establish some perimeters around who and what is involved in operating a dollar stablecoin in the United States of America," Jeremy Allaire said in a Monday interview with Yahoo Finance.

Last week, the cryptocurrency market recently experienced a savage sell-off that saw the prices of ether, cardano, solana, and dogecoin tumble. It came on the back of TerraUSD and sister coin luna tanking in what experts labeled a "death spiral."

TerraUSD (UST), which was supposed to be pegged to the dollar, had tumbled to $0.375 last week in a dramatically "de-peg" while luna, which is free-floating, sank 97% to effectively trade at zero.

TerraUSD was last trading at just $0.088 on Tuesday after falling 17% in the early hours of the day, while luna was down 7% trading at $0.00018188 at 8:15 ET. Luna hit an all-time high of $119.18 on April 5, according to CoinMarketCap.

Allaire said the downfall of these "unstable stablecoins," such as UST was "entirely predictable," adding that there are several "very viable legislative proposals" on the table for the US government to tighten grips on the crypto industry as a result.

He went on to address the impact the damage the crash has left on the crypto industry as a whole. "I think it's hurt retail investors, the ecosystem as a whole, and so there's been some damage done," Allaire said.

Individuals have also been left scarred by TerraUSD's crash, he added. "The really unfortunate thing here is that so many individuals and leaders in the digital asset space bought the hype, promoted the hype, and I think that's hurt people."

Circle runs the USDC stablecoin, which has remained anchored at 1:1 to the dollar throughout the turmoil elsewhere.

His comments echo sentiments expressed by the cofounder of ethereum Vitalik Buterin who thinks holders of TerraUSD and luna should be compensated following the collapse.

Buterin also alluded to subsequent government intervention, like Allaire, saying a government backstop was an "obvious precedent" in reimbursing people who have lost assets, referencing coverage of $250,000 per person.

The Luna Foundation Guard, spearheaded by founder Do Kwon, piped up about the roughly 3.5 billion worth of bitcoin that disappeared after a crypto bloodbath last week.

In a tweet Monday, the non-profit organization, announced it sold almost all of the bitcoin in its reserve in an attempt to defend the stablecoin backed by blockchain Terra, known as TerraUSD (UST), from crashing.

According to the tweet, nearly 80,394 bitcoin were purchased by the Luna Foundation Guard amounting to over $3 billion, but as of Monday, the organization said it had just 313 bitcoins worth about $9.3 million, left in its reserve.

The foundation said it would use the remaining reserves to "compensate users of UST," starting with "smallest holders first."

"We are still debating through various distribution methods, updates to follow soon," Luna Foundation Guard said.

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