Half a trillion dollars was wiped off the sector’s market cap as terraUSD, one of the most popular U.S. dollar-pegged stablecoins, imploded virtually overnight.
Meanwhile, digital coins such as ether continue to take a beating on the price charts, as the sell-off keeps hammering the industry.
Some investors have called the events of the last month a Bear Stearns moment for crypto, comparing the contagion effect of a failed stablecoin project to the fall of a major Wall Street bank that ultimately foretold the 2008 mortgage debt and financial crisis.
“It really revealed some deeper vulnerabilities in the system,” said Michael Hsu, acting Comptroller of the Currency for the U.S. Treasury Department.
“Clearly, you saw contagion, not just from terra to the broader crypto ecosystem, but to tether, to other stablecoins, and I think that’s something that wasn’t assumed. And I think that’s something people have to really pay attention to.”
“What we don’t want to do is choke a new industry and innovation out so that we lose out on opportunities. Or what I’m seeing right now, a lot of these opportunities just move offshore, and we’re missing the economic growth and job creation that’s a part of it. So this is a really important space if we get the regulation right, that can actually be helpful to the industry and protecting consumers,” continued Booker.