Flitch Prediction After Terra Collapses: Will Accelerate Regulatory Requests

Flitch predicts that regulatory requests will accelerate after the collapse of LUNA. (Unsplash)

JAKARTA - A credit rating agency from the United States, Flitch Ratings, said that the collapse of the Terra project would "accelerate the demand for regulation". One of the “big three” credit rating agencies said the release of the UST stablecoin had exposed the fragile nature of the US dollar-pegged stablecoin.

Reported by U.Today. The price of the cryptocurrency LUNA, whose market cap stood at over $42 billion last month, fell below a penny earlier today. The massive collapse prompted Binance to write off LUNA's perpetual contract on coin margin. Several other exchanges also pulled the plug.

LUNA's supply of cryptocurrency has increased 20-fold in just four days. The token swelled to 7.1 billion tokens. The token is currently no longer in the top 300 largest coins with a valuation of only around IDR 711 billion. The issued token currently occupies the 392nd position.

Supposedly, with the exponential growth of LUNA supply this would be good for UST. However, the currently embattled stablecoin is a long way from reclaiming its stake. After yesterday's very short relief rally to $0.83, the stablecoin slipped to $0.43.

US Treasury Secretary Janet Yellen reiterated concerns over Terra on Thursday. It claims that the culmination is a “real-life demonstration of risk” associated with stablecoins. Flitch said last December that stablecoins would face “unique and untested structural challenges.

After UST collapsed, now Dai (DAI) is still the largest decentralized stablecoin with a market capitalization of IDR 89.9 trillion. However, please note that DAI is still partially centralized as Circle's USD Coin (USDC) serves as the number one collateral.