The CRS Shares a Recap of UST Stablecoins' Colossal Fall

The CRS Shares a Recap of UST Stablecoins' Colossal Fall

The US Congressional Research Agency comments on UST stablecoin and implies that it has regulatory liabilities.

The Congressional Research Service, a public policy research institute of the US Congress, has shared a recap of the current algorithmic stablecoins' situation in the crypto world and outlined several significant points.

The colossal fall of UST prices has revealed a “run-like” case where many shareholders and traders have taken out their investments at the same time, thus generating bad numbers in the statistics. So, the CRS suggests that a "run" situation occurs when investors are doubtful about the reserves backing the asset's dollar peg.

Did you know?

Want to get smarter & wealthier with crypto?

Subscribe - We publish new crypto explainer videos every week!

What is Cardano in Crypto? (Easily Explained!)

What is Cardano in Crypto? (Easily Explained!) What is Cardano in Crypto? (Easily Explained!)

On top of that, as the traditional financial system components such as banks and credit unions have their own regulations to avoid such “run-like” occurrences, the stablecoin industry does not implement any measures, whatsoever.

During the past few weeks, the UST stablecoin has crashed significantly and hit a new low. Now, it is estimated at $0.12 as it lost its peg to the dollar. Last year in June, The Iron Titanium (TITAN) token experienced a similar case when its value almost fell to zero in only one day.

On May 12, the CEO of Seoul-based company Terraform Labs Do Kwon suggested a plan to save UST from complete destruction. He stated that the minting capacity will be increased from almost $300M up to $1.2 billion and the base pool will be raised from 50M to 100M SDR.

Gyth L. - Crypto Analyst

by Gyth L. - Crypto Analyst, BitDegree


Loading...