LUNA and UST's crash came right as Singapore, where the company is registered, is rethinking its regulatory approach to crypto. CoinDesk's Asia Markets Reporter thesamreynolds appeared on AJEnglish to discuss how it would affect the rest of the market.
As the crypto winter deepened this month, one wealth-destroying event – the collapse of the TerraUSD and Luna coins – has brought the human cost of unstable cryptocurrency projects to the surface.
The incident epitomises regulators’ nightmare scenario of crypto projects going wrong and prompted US Treasury Secretary Janet Yellen to call for regulation of stablecoins – whose selling point is their supposed stability due to being pegged to another currency or commodity – by year’s end. Former lawyers at the Securities and Exchange Commission say the agency is probably already investigating the case.
Singapore’s parliament had already passed a law last month to increase oversight of firms like Luna that are domestically registered crypto companies but mainly operate abroad. “The second is this was a stablecoin,” Lian said, noting that since it was advertised as having parity with the US dollar and boasted 20 percent yields, it appealed to investors looking to stake their savings over time. This differentiates it from other cryptocurrencies whose price floats freely and are conducive to speculative trading.
South Korea’s Financial Supervisory Service said this week that increased cooperation with foreign authorities is needed to regulate crypto after the Luna crash.“Because this is a global event, there might be a common interest for the US and Singapore to work together on this case,” he said. “The Luna Foundation Guard, with its current balance sheet, could only pay out pennies on the dollar. And aside from those balances, it is unlikely that Terraform Labs has material assets sufficient to pay out any claims against it in a meaningful way,” he added.
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