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In mid-May, stablecoins came under pressure after the collapse of the algorithmic stablecoin UST. Tether co-founder Reeve Collins said Thursday that the collapse of UST could mark the end of most algorithmic stablecoins.
Too bad the money… are gone, however, this is not surprising. It is a stablecoin with algorithmic support. So it’s just a bunch of people trying to figure out how to tie something to the dollar,” Collins said.
Curiously, USDT, backed by cash and corporate bonds, also temporarily lost its peg to the U.S. dollar due to massive repayments.
Circle CEO Jeremy Allaire, by contrast, believes that algorithmic stablecoins will continue to be created to find the best algorithm for pegging to the US dollar.
According to the analytical platform Santiment, the collapse of TerraUSD (UST) and the temporary cancellation of the Tether (USDT) peg caused a correction in the cryptocurrency market. During May, stablecoins actively moved to crypto-exchanges, while the activity of cryptokites was noted.
At the same time, the market capitalization of Circle USDC, DAI and BUSD stablecoins has grown significantly as traders have turned to other stablecoins.
Problems with stablecoins are likely to lead to the accelerated introduction of rules and regulations. Cryptocurrency transactions can be tracked by governments due to increased scrutiny and scrutiny.
I expect that once we have a clear regulation of stablecoins. The basic rules of regulation will be that you will have a clear reserve with a set of strong assets that you will be required to check regularly, “said Bertrand Perez, CEO of the Web3 Foundation.
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