LUNA's crash remains in the spotlight.
Welcome to The Daily Forkast, May 16th, 2022.
I'm Megha Chaddah of Forkast covering all things blockchain.
After a roller coaster weekend of pump and dumps for LUNA, Terra's UST has not regained
its US dollar peg and questions are being raised over the need for regulation and what
investors should be aware of.
We'll take a look at that, plus a whole lot more coming up.
Let's get you up to speed from Asia to the world.
Join thousands of NFT traders who already start their day on CryptoSlam.
We are taking a deep dive into the fallout from Terra's troubles today.
First up, in South Korea, financial regulators have reportedly begun an emergency assessment
of digital assets following the LUNA fiasco.
The move is in line with the Government's plans to establish regulation on cryptocurrencies
with its Digital Asset Basic Act.
One government official told local media that the LUNA debacle will likely speed up enactment
of virtual currency regulations in South Korea.
Currently, the government has no legal basis to take direct measures to examine or supervise
the Terra platform, as existing laws are only geared towards anti-money laundering issues.
South Korea's upcoming digital asset bill is expected to go into effect in 2024, and
while the details of the legislation have not yet been revealed officially, it's predicted
that it will focus on investor protection.
Meanwhile, South Korea's national police agency has revealed it is closely monitoring the
LUNA situation, but there is no plan to investigate TerraForm Labs just yet.
It added that no civil complaints have been filed against Do Kwon when asked about the
news of the CEO getting sued overseas.
Over in China, State backed publication The Economic Daily has praised the government's
crypto ban amid LUNA and UST crash.
The commentary piece describes Beijing's crypto ban as "decisive, powerful and timely," adding
that such measures prevent cryptocurrency risks from spilling into the country's economy.
But Chinese investors are still paying close attention to the crypto market, as Luna and
Bitcoin were ranked as the 9th and 12th hottest search terms on social media platform Weibo
during last week's crash.
China banned crypto trading and mining last September, leading to China based exchanges
and miners fleeing overseas.
You can find those stories and more at Forkast.News.
Continuing with Luna, the price of Terra's native token repeatedly pumped and dumped
over the weekend, becoming as volatile as low cap meme currencies.
Meanwhile, many have questioned Terra's response, and founder Do Kwon's plans for a revival
of the ecosystem focused.
Lachlan Keller has more.
Luna hit an all time low on Friday and it has remained extremely volatile since, with
data aggregator Coingecko warning over instability in both its price and liquidity.
Meanwhile, Terra's algorithmic Stablecoin UST has not regained its US dollar peg and
was trading around US$0.16 Monday morning in Asia.
Terra network developer Do Kwon posted a plan on Saturday to revive Luna, suggesting reconstituting
the network and resetting ownership to 1 billion tokens to be distributed among current and
former owners.
However, Binance's CEO Changpeng Zhao said this would not work, calling the plan wishful
thinking.
Ethereum co-founder Vitalik Buterin also weighed in, saying that algo stable, a term used to
describe algorithmic stablecoins, has become a propaganda term serving to legitimize un-collateralized
stablecoins by putting them in the same basket as those which are collateralized.
He says it needs to be emphasized that the two are very different.
Many users responded directly to the plan on Terra's research form, with one saying
that it comes off as trying to put a band aid on a dam.
They went on to ask whether Kwon would consider helping members of the community out with
some of the money he's made from Luna.
Several additional proposals have been made by the forum's users on ways that either help
reimburse those who have lost out or to revive the network, while others have posted on social
media, including Twitter, saying they have lost their savings and complaining that they
really believed in Luna.
Of course, we'll be keeping watch on whether any of those plans come to fruition.
For Forkast, I'm Lachlan Keller.
And finally, in an exclusive interview with Forkast Editor in Chief Angie Lau. in Singapore,
Piyush Gupta, the CEO of DBS Bank, talked on the issues raised by Terra's crash for
regulators.
So obviously, the weaknesses in the system, you know, you can short sell Terra and Luna
exactly as you can sell short sell any other currency.
If you had retail investors sitting on this, relying on the technology today, what would
you go and say to them that, well, the technology was great, but something went wrong?
And I think as responsible regulators, they're quite mindful of that.
So I understand where regulators are coming from now.
To my mind, like I said, I think technology is here to stay.
I think the train's left the station.
So the right answer is not to try and regulate it away, but to regulate it so that you can
get into it in a way that you can put up markers and acceptable boundaries.
Given the two concerns that the regulators have, it is possible they're right that five
years from now you don't need regulators.
But that goes back to, like I said, DeFi evangelists.
You could argue that ten years from now you don't need countries, you won't need nation
states, you won't be central banks, you won't need banks and smart contracts will run the
world.
I have to say, I'm a little bit less certain that this world will come to pass any time
in the next ten years.
I think I think that the growth of this industry actually does depend on stability and market
confidence.
And therefore, regulators actually play a huge part in helping really seed the next
phase of growth for the blockchain industry and Web3.
The difference is, how are those conversations being had right now?
So curious, you know, you're really leading the charge, putting a lot of capital, putting
a lot of strategy into this play.
How often do you do talk to your cohorts in the governmental agencies and the regulators
who are very much, you know, a big part of your business.
So Angie, we talk to them quite frequently.
But I think it's fair to say that there is no common view among regulators.
You have regulators who would essentially say, look, this is too dangerous.
Just regulate it out of the formal banking sector entirely and let somebody else deal
with it.
You have other regulators who would say, this technology is here.
We should use it and use it in a pragmatic way and see how we can actually work to put
the right safeguards in place while you do that.
I was interestingly on a call with several central bank governors a few weeks ago, and
it's quite interesting how the range of opinions manifested itself from different central bank
governors.
So there's no one size fits all, even in their own thinking.
What would you say the spectrum is on the far end?
Well, on the one end is just regulated.
And when you raise that as banks, most of the banks would say if you regulate it, you
don't make the industry disappear, you don't make the parts disappear.
You just squeeze it out of the formal system into the informal system.
And that's The Daily Forkast from our vantage point right here in Asia.
For more, visit Forkast News.
I'm Forkast's Megha Chaddah, until next time.