Terra and UST both seemingly instantly went to zero, wiping out tens of billions of dollars in market value, and a large number of investors who suffered losses have already filed lawsuits.
Terra’s collapse could have long-term effects on cryptocurrency adoption as more governments get ready to increase regulatory strictness around cryptos.
Many of the industry’s major players have warned that regulatory pressures on cryptocurrencies could now increase.
Here are three nations that are most likely to step up regulatory pressure on cryptos:
South Korea will be the first country to step up the pressure. South Korea has been the most fanatical country in the world for cryptocurrencies.
Data shows that more than a third of the country’s citizens invest in cryptocurrencies, and South Korea is also the main source of customers for many derivatives trading exchanges, such as Bybit and Bitget.
The new president was set to ease some restrictions to attract younger voters, but there was strong opposition. Additionally, Terra is known for being a project founded by South Koreans and with Korean capital.
The Korean community and investors lost a lot of money in this event. The largest hashed venture fund lost more than $3.5 billion.
The government has established a financial regulatory body called Death, the IRS is investigating taxes, the National Assembly has requested that Terra CEO Do Kwon attend hearings, and several law firms have launched class-action lawsuits.
This also casts a shadow over the future of political sympathy for cryptocurrencies in South Korea.
The Terra Foundation moved to Singapore from South Korea, which could lead to a lot of litigation.
Singapore has historically been quite friendly to cryptocurrencies and has attracted cryptocurrency institutions from around the world, particularly from Asia and Greater China.
However, in recent years it has also come under pressure from other countries, leading to targeted raids, and Binance and 3AC, among others, have moved to Dubai.
After the Terra crash, Singapore’s regulatory policy is likely to be tightened. More than 1,000 local Singapore investors have told police they have lost money on the project.
The current hub for cryptocurrencies, DeFi, and NFTs has also brought together the largest capital and large companies. But there have also been traditional central bankers, economists, and veteran investors in the US who have spoken out against cryptocurrencies.
After Terra’s collapse, the Treasury Department, the Securities and Exchange Commission, and other key regulators indicated they were trying to tighten regulations.
And in China, regulators are eyeing USDT-led stablecoins, and the UST crash could also be an excuse for Chinese regulators to step up their crackdown on stablecoins yet again.