S.Koreans Chance on Luna Climbing – Crypto Worries

Given that the meager prices have little to lose, South Korean speculators amassed Luna recently; Cryptocurrency lost 99.99% of its value last week after the pair collapsed. Both tokens are linked to Terra, co-founded by Do Kwon, a blockchain platform. According to Elliptic, investors in them lost about $42 billion. Luna was one of the most famous cryptocurrencies around the globe. Its downfall with TerraUSD caused turmoil across the crypto spectrum globally. Bitcoin lost about a quarter of its value between May 9-12.

It costs almost $100 by the end of April. Luna now trades in a fraction of one cent. So low that they buy bets from speculators to arrange a miraculous recovery. According to investors, the luna was once the top coin in the top ten market capitalization. So they will do anything to revive It.

In two days, the number of investors in the failed cryptocurrency rose by more than 50% on major Korean stock exchanges. It amounted to 280,000 as of May 15. The purchases came mainly from domestic speculators, although there was an influx from abroad.

Crypto Concern

Bithumb announced that they would stop trading support for Luna. Coinone suspended deposits in cryptocurrencies before. The tendency of South Koreans, especially young people, to invest in volatile and risky assets, from stocks to cryptocurrencies, alarmed regulators.

Their early enthusiasm helped Luna and TerraUSD rank among the ten largest cryptocurrencies globally in terms of market capitalization. However, everything fell apart on May 10, when the TerraUSD 1:1 attachment to the dollar broke. It traded at around 10 cents on Wednesday. Unlike most other large stable coins that support other assets, the value of TerraUSD is derived from complex algorithmic processes, which are often associated with the paired token Luna, which floats freely.

Depending on the system, one TerraUSD token can exchange for $1 a luna and vice versa. After the exchange, the coins will destroy. If TerraUSD falls below $1, traders will encourage to buy stablecoin to exchange it for $1 worth of Luna. This will reduce the supply of TerraUSD and return its price to $1. It was a theory, though the market proved that the premise was wrong. As the market collapsed, hundreds of outraged retail investors flooded social media with tales of disaster; some demanded compensation. The fact is that the government can do little to protect investors; Because cryptocurrency trading takes place beyond its regulatory scope.

Industry and Crashes

The cryptocurrency industry is trying to address US lawmakers’ concerns about stablecoins following the collapse of TerraUSD, which has destroyed billions of cryptocurrency markets. The Blockchain Association and the Digital Chamber of Commerce, which represent some of the most influential cryptocurrencies, say they ask questions from the Capitol after TerraUSD broke its connection last week and dropped 90%.

Stabilcoins are cryptos that attempt to keep up a consistent exchange estimate with fiat currencies. The $163 billion space is dominated by tokens tied to the US dollar, such as Tether and USD Coin, storing reserves in traditional dollar assets. Some stable coins, however, use a complex algorithmic process.

Capitol Hill lawmakers questioned lobbyists about the structure of the UST; They tried to determine whether its collapse could be avoided and whether the same fate could befall other Stabilcoins. Lobbyists are urging lawmakers not to violate the range of stable coins. When the cryptocurrency market exploded and reached $3 trillion in November, the attention of politicians increased.

In response, the crypto industry has stepped up its presence in Washington and spent $9 million in 2021 lobbying. The industry’s growing influence will be examined as it seeks to curb the collapse of the UST and the broader crypto market, which decreased from $1.98 trillion to $1.3 trillion; In just six weeks because of investor fears; In connection with the increase in interest rates.

Conclusion

Several draft Stabilcoin bills are currently circulating in Congress. While analysts say the chances of Congress getting any of them this year are slim When MPs are focused on by-elections. The recent movement in the crypto market has attracted the attention of many legislators.

President Biden’s administration has focused mainly on dollar-backed stable coin rules. A report released by the Treasury Department in November recommended that Congress; Regulate Stabilcoin issuers such as insured depository institutions; However, this did not include the algorithmic Stabilcoin. They said lobbyists had to change tactics and quickly educate lawmakers about the differences. Although group members do not currently work with algorithmically stable coins, the chamber sets up talking points to explain how they work.