According to Fitch Ratings, an American credit rating firm, the Terra Project’s historic failure will “accelerate calls for regulation.”
The unmooring of the UST stablecoin has exposed the fragile nature of a privately issued dollar-pegged stablecoin, according to one of the “Big Three” credit rating agencies.
Earlier in the morning, the price of the LUNA cryptocurrency, which had a market worth of nearly $42 billion last month, fell below one cent. As a result of the big crash, Binance delisted coin-margined LUNA perpetual contracts as a result. Other exchanges have also stopped trading.
In just four days, the supply of the LUNA cryptocurrency has increased 20-fold, reaching 7.1 billion tokens. The token is no longer among the top 300 currencies, with a current valuation of only $49 million, and is presently ranked 392nd.
Although the exponential expansion of LUNA’s supply is meant to be beneficial to UST, the beleaguered stablecoin is still a long way from recovering its peg. The stablecoin has retraced all the way back to $0.43 after a brief relief rally to $0.83 early this morning.
Treasury Secretary Janet Yellen expressed her concerns about Terra again on Thursday, arguing that its demise is “real-life evidence of the risks” involved with stablecoins.
Read more: LUNA turns into havoc for investors
