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On Tuesday, May 24, financial regulators held an emergency meeting in the National Assembly of South Korea regarding the potential consequences of the collapse of Terra. This is reported by local media, citing statements by departments.
The hearings were attended by representatives of the Financial Supervisory Authority (FSS), the Fair Trade Commission (FTC) and the Financial Services Commission (FSC).
According to the Yonhap News Agency, the financial intelligence unit of the FSC called the incident, as a result of which the Terra team, in an attempt to stabilize the price of UST, allowed the uncontrolled growth of the supply of the LUNA cryptocurrency, a “whirlwind of death.”
According to investigators, before the collapse of the project’s ecosystem in South Korea, about 100,000 people held LUNA. 10 days after the loss of UST parity with the US dollar, their number increased to 180,000.
The FSC is considering the creation of a regulatory framework for the regulation of stablecoins and the DeFi sector.
“Because of the characteristics of virtual assets such as decentralization and anonymity, as well as their cross-border nature, it is necessary to ensure consistency with global norms and strengthen the cooperative system to ensure effective regulation,” the ministry said.
At the meeting, FSS Senior Vice President Li Changwu said that the agency plans to conduct inspections of companies that provide financial services related to Terra, writes Money Today.
The official called it “unlikely” that the crisis would affect traditional markets. However, in order to neutralize the risks, the agency will take measures.
The FSS will also assemble a research team that will focus on analyzing cryptocurrency-related risks. The goal is to classify digital assets by the degree of reliability.
The FTC, in turn, intends to check the compliance of bitcoin exchanges with the recommendations of the Commission regarding user agreements, reports Yonhap News Agency.
In 2021, the regulator ordered 16 local companies, including Bithumb and Dunamu, to adjust standard contracts, as it considered them “unfavorable for customers.”
Earlier, the media reported that in South Korea, the investigation of the collapse of Terra will be handled by an interdepartmental group consisting of prosecutors and financial regulators.
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