Terra Luna Stablecoin Collapse — UST collapse strengthens the push for crypto regulation
Within 24 hours, blockchain company Terraform has halted the processing of new transactions for TerraUSD (UST) and linked coin LUNA twice. To boot, the price of the coins have been falling exponentially and the price of LUNA is virtually valued at $0 currently. In this case, the cause of the fall has not been identified however, it is essential to take note of certain points:
Highly stringent regulations exist in some industries but not others: Should this be the case?
Most of the existing markets are under stiff restrictions, but not the blockchain and cryptocurrency industry. For instance, Elon Musk would face trouble from the U.S. Securities and Exchange Commission if he speaks about Tesla. However, regulators have never forbidden him from talking about any coin such as Dogecoin.
The cryptocurrency market ought to have more regulations and compliance processes in place. By doing so, it would curb a lot of risk of such situations happening again. If someone was laundering money through cryptocurrencies, a Know-Your-Transaction (KYT) would reveal such suspicious transactions and they can be stopped before it causes much effect to the market.
Are calls to add more regulations and higher compliance standards to the cryptocurrency industry valid?
Although many investors and purchasers of cryptocurrencies do not wish for compliance regulations to affect the industry, it appears to be necessary and fully valid. This would protect everyone.
The laws of code and the free market take precedence in the absence of any regulatory authority. This means that the market could be highly volatile and crash since there is no one governing body.
How should people change so that the cryptocurrency market can maintain its freedom?
Since blockchain and the cryptocurrency market remain highly decentralised, the general population may rule the market with their own motives in mind, which serves their interest only. It is natural that humans have a tendency to fight for something which brings them great benefits and take advantage of any loopholes where possible.
With #LUNA and cryptocurrencies experiencing a similar fall, participants in the market should refrain from poking at the holes within the market. By doing so, regulators are more likely to see the effort from the people and ease the desire to clamp down on the industry and its players. Otherwise, regulators may just have to add more regulations to prevent something like the aforementioned from happening once again, since it would affect the wider market. After all, regulators are just looking out for their own reasons too — protecting the economy.
