The LUNA Effect: G7 To Discuss Cryptos After The Terra Fall

The recent turmoil in the world of cryptos, which saw one of the most promising projects in the top ten crypto list, Terra (LUNA), evaporate from the crypto map, got into the crosshairs of global forces like the G7. It appears that the blow is severe, as Finance ministers of the G7 nations are gathering next week with cryptos as a priority topic of discussion.

Francois Villeroy de Galhau, head of France’s central bank, noted that Terra’s downfall is acting as a “wake-up call for the urgent need for global regulation.”

“Europe paved the way with MICA (regulatory framework for crypto-assets), we will probably … discuss these issues among many others at the G7 meeting in Germany this week”, de Galhau added.

Stablecoin audits?

Apart from taking legislative measures to ensure the price of stablecoins remains stable and pegged to a fiat currency, regulators around the globe are increasingly speaking about stablecoin audits. A week after the TerraUSD (UST) de-pegging and consequent crash, Ki Young Ju, CEO of CryptoQuant, posted a question about the financial stability of the largest stablecoin to date – Tether (USDT), with a market capitalization of $74.14 billion.

Responding to the audit requests, Tether CTO Paolo Ardoino backed up the stablecoin project.

“We have redeemed 7B in 48h, without the blink of an eye. How many institutions can do the same? We can keep going if the market wants, we have all the liquidity to handle big redemptions and pay all 1-to-1. Yes, Tether is fully backed.” Ardoino commented.

South Korea already taking actions

And while the G7 prepares to have discussions, South Korea’s financial authorities have launched emergency inspections of cryptocurrency exchange operators. It turns out that South Korea’s Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) asked local crypto exchanges to provide transaction data for TerraUSD and LUNA, with emphasis on trading volumes, closing prices, and the number of investors involved.

“Last week, the financial authorities asked for data on the number of transactions and investors and sized up the exchanges’ relevant measures. I think they did it to draw up measures to minimize the damage to investors in the future,” local exchange operator representative alarmed.

It turns out that the problem with LUNA and its UST subsidiary may be more of a concern for South Korea than the rest of the world, as an estimate of 200,000 investors in South Korea is believed to have invested in TerraUSD and LUNA.

Do Kwon to appear before the National Assembly?

The Founder of Terraform Labs, Do Kwon, may even be brought before the National Assembly for a hearing, as Yun Chang-Hyun, a South Korean lawmaker, proposed Terra’s founder to be heard on the cause of the situation and measures to protect investors.

"We should bring related exchange officials, including CEO Kwon Do-Hyung of Luna, which has become a recent problem, to the National Assembly”, Yun noted, adding that investors were losing money and South Korea’s legislative body should not delay its action.

Kwon’s countermeasures

Do Kwon immediately fought to find a way to redeem the UST pegging by selling $3 billion worth of Bitcoin through the Luna Foundation Guard, but his efforts did not reach a proper UST stability. Kwon also proposed a hard fork to the Terra blockchain. The hard fork would see another token forming, without algorithmic stablecoins, while the current version of the blockchain would be renamed to Terra Classic (LUNC).

Markets still in the red

Despite the blow that happened a week ago, the crypto market is still seeing hard times to revive itself to the levels prior to the UST mayhem. Bitcoin, for example, normalized around $30,000 per BTC, while Ethereum settled at the $2,000 mark with both coins showing moderate price fluctuations. Solana (SOL), however, is still on a downward spiral, as with most of the projects in the crypto top 100 lists.

Meanwhile, cryptos like Zcash (ZEC), as well as the meta-tokens of Decentraland (MANA) and Axie Infinity (AXS) are seeing positive weekly price changes and a spike in trading volumes.