Terra’s Recent Fallout Sparks Regulatory Actions in Japan, South Korea, the US, and the UK

Terra’s Recent Fallout Sparks Regulatory Actions in Japan, South Korea, the US, and the UK

The fallout from the collapse of cryptocurrency trading platform Terra caused regulators in Japan, South Korea, the US and UK to take action. Was it swift enough? The short answer is no.

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The “seoul terraform ust do 78m” is a recent issue that has been brought up in the news. The issue sparked regulatory actions in Japan, South Korea, the US, and the UK.

Terra’s Recent Fallout Sparks Regulatory Actions in Japan, South Korea, the US, and the UK

Terra’s Recent Fallout Sparks Regulatory Actions in Japan, South Korea, the US, and the UK

 

The collapse of the Terra ecosystem’s native assets, LUNC and USDT, in May heightened investor fears and cast doubt on stablecoins”stability.’ The meltdown illustrated not just the volatility of digital assets, but also the fragility of this new market. As a result, different financial authorities and regulatory agencies throughout the globe have been paying closer attention to this arena in recent weeks.

Here’s a list of places where regulators have stepped up their efforts:

This month, South Korea will establish a digital asset regulator.

Last Monday, South Korean officials convened to assess the aftermath of Terra, and many exchanges, including Upbit, were apparently questioned. According to a local article, calls for stringent regulation prompted the government to establish a Digital Asset Committee to monitor the digital assets field.

The group will work with a combined body of members from the main five local exchanges — Bithumb, Coinone, Cobit, Gopax, and Upbit – and will be announced later this month. It will be housed inside the Financial Supervisory Service but will be decommissioned after the passage of the ‘Framework Act for Digital Assets,’ which would establish an official government organization to supervise the industry. Before the Terra meltdown, there was no definitive answer to the issue of who oversees the Korean crypto space.

The Financial Supervisory Service was only recently tasked with analyzing and reducing the risk posed by locally sold virtual assets. This was after it was given the ability to function as the main authority on issues relating to virtual assets. As a first step, the FSS has said that it plans to outsource research activities to organizations that have public confidence.

It is also illegal for operators of digital asset trading platforms to seek exposure to crypto assets. This follows the disclosure that Upbit held exposure to LUNC before listing the asset on its marketplace in 2019. The decision to prohibit exchange operators from participating in transaction and brokerage operations is intended to increase transparency.

Regulators in the United Kingdom and the United States have issued warnings about the dangers that stablecoins pose in the aftermath of the UST collapse.

Other countries have increased their regulatory efforts outside of Korea, prompted by the need to foresee the harm that stablecoins may bring to financial stability. The United Kingdom, in particular, is concerned about the potential harm that stablecoins might do to the larger financial system.

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In a three-part consultation document, the HM Treasury said, “Since the first promise to regulate some kinds of stablecoins, developments in cryptoasset markets have further underlined the need for adequate regulation to assist alleviate consumer, market integrity, and financial stability concerns.”

The government will delegate oversight of the payments sector to the Financial Conduct Authority, the country’s financial watchdog. The Bank of England, on the other hand, should be in charge of managing systemically critical payment networks, according to the document.

Financial authorities in the United States have expressed similar worries. In an interview with Bloomberg, Rohit Chopra, the director of the Consumer Financial Protection Bureau, claimed that the crash discredited the idea that stablecoins could replace the dollar.

Non-banking businesses are prohibited from issuing stablecoins in Japan.

Only registered transfer agents, financial institutions, and trust firms may issue stablecoins, according to a measure enacted by Japan’s parliament on Friday. The new structure is designed to safeguard investors and the financial system from the potential for volatility as a result of stablecoin adoption.

According to Nikkei, the law would go into force next year. Separately, Japan’s financial watchdog, the Financial Services Agency, is prepared to introduce new laws governing stablecoin issuers in the coming months.

The “where is do kwon now” is a question that has been asked many times. Terra has recently had some serious issues and the fallout from these events have sparked regulatory actions in Japan, South Korea, the US, and the UK.

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