- This was a particularly bad week for the crypto market, with one top project fizzling out almost completely
- In the wake of the news, government officials are speaking about crypto regulation
- President Joe Biden signed into law a crypto executive order earlier in the year to get the ball rolling
The crypto meltdown seems to finally be drawing to a close, with many top projects charging into the green for the first time this week. However, they are not joined by Terra (LUNA-USD), whose dramatic crash upended the market throughout most of the week. Still, the event has policymakers talking. More and more government officials are speaking out on crypto regulation. But it looks like these policymakers aren’t just talking about crypto. Many seem to be investing in the industry.
Throughout the last several days, investors have witnessed the spectacular crash of LUNA and TerraUSD (UST-USD) prices. After beginning to slip on Saturday, the UST stablecoin has all but completely lost its $1-pegged value. Now, it is trading at just 15 cents. The crash of the supposedly rock-solid stablecoin has investors shook. As a result, many have decided to take their funds from the Terra ecosystem. This, in turn, is causing a crash in LUNA prices. A top 10 crypto by market capitalization just last week, the coin is now essentially worthless. It has fallen to less than a quarter of a cent from its all-time high of $119, which it reached just last month.
This news is turning crypto talk on its head; lots of people both within the market and outside of it are having talks about the viability of digital currency. They wonder whether a decentralized economy of assets is truly feasible.
Crypto Meltdown Brings Comments From Around the Capital
As a result of the crypto meltdown, government officials are showing interest in resuming the crypto regulation debate. Since Terra’s volatility first showed itself on Saturday, we are hearing from not only Congress, but the U.S. Securities and Exchange Commission (SEC) and the U.S. Treasury as well.
Pennsylvania Senator Pat Toomey is one of the first representatives to address crypto since UST lost its $1 peg. The senator, who serves on the Banking, Budget and Finance committees, is strong in his resolve to keep the stablecoin market alive. Specifically, Toomey says that stablecoin assets still do not pose the same risk to financial systems as regulators espouse. He adds that “failure should be an option” for all stablecoins, allowing the market to figure out what works and what doesn’t.
SEC Commissioner Hester Peirce seems to be backing up Toomey’s sentiments. Another crypto bull in government, Peirce reiterates that regulations need to leave room for projects to fail, saying it is “a part of trying new things.”
Meanwhile, Treasury Secretary Janet Yellen spoke earlier this week on regulations as well. Yellen’s take is that the government should favor “responsible innovation,” not being so stringent as to kill innovation but rather to produce safety nets to protect investors.
These comments all come as lawmakers themselves seem to be embracing crypto for personal gains. Last year, only eight Congresspeople owned or traded cryptocurrencies. This year, that number has nearly tripled, with 21 Congress members or their close family trading crypto assets. This revelation is shaking up some analysts’ nerves; law expert Richard Painter says that this exposure could “undermine public confidence in the crypto market.”
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.