As the collapse of the Korean coins ‘Luna’ and ‘Tera’ shakes the global virtual asset market, financial authorities begin to regulate stablecoins (coins designed to be linked to fiat currencies such as dollars) and DeFi (decentralized finance) did with A method of disclosing the risk level for individual coins is also promoted.
As stablecoins plummeted, social concerns regarding virtual assets grew, and related regulations in major countries, including the United States, became full-fledged. However, due to the followingmath of this crisis, large-scale outflow of funds continues in the global stablecoin market, increasing investor anxiety.
○ The government will prepare measures to regulate stablecoins
Vice Chairman Kim So-young of the Financial Services Commission announced at the meeting for the emergency inspection of virtual assets held at the National Assembly on the 24th, “We will actively review measures to regulate new digital assets such as stablecoins and DeFi that affect consumers and financial market stability.”
It is interpreted to mean that the new virtual assets will be actively regulated along with the enactment of the ‘Framework Act on Digital Assets’, which is being discussed in the National Assembly to prevent the ‘second Luna/Terra’ incident. Tera, a stablecoin, was designed to be pegged to one dollar in value, and Luna was issued to support the value of Terra used in DeFi, etc.
However, as it takes time to prepare legislation and systems, the party level is said to be considering a plan to revise the enforcement ordinance of the Specific Financial Transaction Information Act (Special Provisions Act). Il-jong Seong, chairman of the People’s Power Policy Committee, who hosted the meeting, said, “I requested that we consider whether disturbances in market order, etc. can be resolved with the enforcement ordinance of the Special Act.”
The FSC also ordered the industry-level self-regulatory plan to be prepared in relation to the listing and delisting of coins. It seems that the exchange should provide investors with a white paper or evaluation report containing coin information as a must, and prepare an emergency plan in case of a ‘coin run’ (massive coin withdrawal) such as the Luna incident.
The National Assembly heralded strong regulations on exchanges. “When exchanges violate conflicts of interest and systems, we need to enforce strong legal sanctions so that the market functions normally,” Sung said.
The Financial Supervisory Service proposed a method of disclosing the risk level of virtual assets. Kim Yong-tae, director of the digital innovation department of the Financial Supervisory Service, said, “External institutions will analyze the risks of each virtual asset so that investors can see them when evaluating listings on exchanges in the future.” The FSS will also conduct on-site inspections of Terraform Labs, which issued Luna and Terra, and companies that have provided related services.
○ “Second Terra Naona” unstable stablecoin market
Globally, the followingmath of the Luna and Terra collapses continues. International Monetary Fund (IMF) President Kristalina Georgieva attended the Davos Forum in Switzerland on the 23rd (local time) and said, “There has been a lot of confusion in stablecoins. If she promises a 20% return even though it’s not backed by a stablecoin (value per dollar), it’s a pyramid scheme,” she noted.
According to CoinMarketCap, a virtual asset information site, as of 9 am on the 24th, Tether, the No. This outflow is equivalent to one-eighth of Tether’s reserves.
In particular, unlike Terra, which is an algorithmic method, Tether is showing an unstable appearance, dropping to $0.95 on the 12th of this month despite the structure of maintaining ‘1 tether = 1 dollar’ with fiat currencies such as US dollars as collateral. There are also concerns in the industry that anxiety regarding stablecoins might lead to a recession in the virtual asset market as a whole. This is because stablecoins account for one-eighth of the global virtual asset market cap and have served as the liquidity of the market.
Reporter Kim Ja-hyun zion37@donga.com
Reporter Lee Sang-hwan payback@donga.com
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