/ Arf Credit Line / Arf Blog
May 19, 2022

$3 billion in bitcoin was sold in a last-ditch attempt to save UST stablecoin from collapse

Arf's Perspective: Yet another so-called “algorithmic stablecoin” breaks the buck by getting caught in the inescapable trap of a bank run as all partially collateralized assets would under just enough market pressure. This time though, it was seen coming from miles away by several cryptocurrency experts since the now fallen stablecoin Terra USD’s (UST) peg was being held by undercollateralized Bitcoin reserves and the yield protocols were heavily leveraged, offering unrealistic annual percentage yields (APY) as high as 20% with nowhere nearly enough UST liquidity in the contracts.

Although about $40 Billion USD of market capitalization were wiped out in just days by the probably most cash efficient financial engineering attack in the history of cryptocurrencies, this might prove a net good for the future of truly stable stablecoins. Several awareness campaigns were launched across a variety of channels by the issuers and prominent advocates of USD pegged stablecoins such as USD Coin (USDC) and Tether (USDT). The reaction by the regulators to these campaigns were positive and the UK government announced that the country will regulate the fully reserved 1:1 pegged stablecoins by designating them as means of payment.

Coming weeks and months will show whether this was the turning point for stablecoins in terms of mainstream adoption and regulation.


Is USDC or USDT more suitable for payments? Read our take here.

Read the original post by CNBC here.

Related Articles

October 4, 2023

Stablecoin Regulations: A snapshot of UK, US, EU, and Singapore

Recent regulatory developments reflect increasing confidence in fiat-pegged stablecoins. While regulations had struggled to keep pace with the rapid evolution of cryptocurrencies for some time, the uncertain regulatory landscape did not impede the exponential growth of stablecoins. Some of the world's largest economies have now begun to establish regulatory […]

August 17, 2023

The Role of Digital Assets in Cross-Border Payments

In today's global economy, the efficient flow of cross-border payments is essential for international trade and financial transactions. However, traditional cross-border [...]

June 28, 2022

RWA-based Lending: A New Paradigm In Digital Asset Lending

Lending is - and has always been - one of the most important aspects of financial services. Over the course of history, several of the world’s greatest feats would never have been possible without the input of strong financiers who believed in certain visions and gave the funds for them to be brought into reality.  […]

COMPANY
INSIGHTS
Menu
FOLLOW US
AWARDS
Arf Financial GmbH is a Member Of The VQF Self-Regulatory Organization (VQF SRO Member Nr. 101012) for combating money laundering and preventing terrorism financing.
COPYRIGHT © 2024 ARF.ONE
Turmstrasse 18, 6312 Steinhausen Switzerland