The CRS raised policy issues related to the risk that the crash of the stablecoin UST poses. They stated there might be gaps in the regulatory frameworks for stablecoins, restricting the assets that could back them.

A document recently published by the Congressional Research Service (CRS) provides an overview of algorithmic stablecoins. The legislative agency supporting the US Congress also noted factors to consider in the recent crash of TerraUSD (UST).

The CRS described the crash of the stablecoin UST as a bank-run-like scenario. They also raised policy issues related to the risk that those events pose. The agency said a bank run situation begins when users doubt the reserves supporting the parity of the asset to the US dollar.

In addition, they pointed out that there is no proper regulation of the stablecoin sector. There may thus be gaps in the regulatory frameworks for those cryptocurrencies, as the agency indicated in a previous report. They also highlighted that some policy proposals might restrict the assets that could back stablecoins and establish reporting requirements.

Kwon Proposes Reviving Terra and Includes a Redistribution Plan

Do Kwon, the co-founder of Terraform Labs, brought forward a proposal to revive the Terra ecosystem. That happened following the historic decoupling of its algorithmic stablecoin UST, which plunged Terra (LUNA) tokens into nearly zero.

Kwon said the Terra community must rebuild the chain to maintain the developer community and ecosystem.

His proposal emerged as a response to validators discussing the possibility of forking the Terra chain. It involves compensating UST and LUNA holders unable or unwilling to sell their holdings during the price crash.

Kwon Puts Forward His Terra Ecosystem Revival Plan

Kwon returned from his temporary hiatus with what he called Terra Ecosystem Revival Plan 2.

The South Korean developer considers it worth preserving the Terra ecosystem because there are hundreds of valuable developers in it. He said those experts work on decentralized finance (DeFi), fungible job markets, state-of-the-art infrastructure, and community expertise.

The CEO of Terraform Labs proposed restoring network ownership to 1 billion tokens distributed among LUNA and UST holders. He said they would allocate 40% of those coins to LUNA holders before the decoupling event. He explained that 40% would go to UST holders during the new network upgrade.

Nayib Bukele Meets with Several Central Bankers to Discuss Bitcoin

Over the last week, 44 central bankers from developing countries discussed financial inclusion, small and medium business financing, and Bitcoin (BTC). Delegates from Ghana, Burundi, Jordan, the Maldives, Pakistan, and Costa Rica met with Salvadoran president Nayib Bukele.

Douglas Rodríguez, the director of the central bank of El Salvador,  said that El Salvador was proud to receive those financial representatives. They wanted to learn about the implementation of Bitcoin and the policies to promote financial inclusion.

The Salvadoran government seeks to deepen its knowledge of financial inclusion and the digital economy and share how it has benefited from Bitcoin. El Salvador became the first country to adopt the cryptocurrency as a legal tender in September 2021.

By Alexander Salazar


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