TerraUSD ‘stablecoin’ Removed From List Of Crypto Exchanges | Cryptocurrencies – Tech Tribune France

TerraUSD, the “algorithmic stablecoin” whose collapse caused a multi-billion dollar sell-off in crypto markets, deactivated its blockchain and was delisted from major exchanges, shutting down the project for good.

However, the wider impact of the failure of the project appears to have been limited. TerraUSD was once valued at over $40bn (£33bn).

Shockwaves swept through the cryptocurrency markets on Thursday as Tether, the largest stablecoin and a fundamental part of the digital asset ecosystem, broke its peg to the dollar. As of Friday, however, tether was back to within a fraction of a percent of its $1 peg and successfully processed more than $3 billion in withdrawals without issue.

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Bitcoin and Ethereum, the two most important cryptocurrencies, recovered from their Thursday morning lows. Bitcoin is trading at over $30,000 a coin, down from $27,000, while Ethereum is at $2,000, down from $1,700. Both remain well below where they were trading at the start of the week.

Terra’s failure is likely to topple more dominoes, Fitch Ratings warned. “Terra’s failed peg has caused shocks in the decentralized finance sector, with a key savings and lending protocol, Anchor, leading to a massive liquidation of UST-backed loans and the pricing of other crypto tokens also affected,” the company said.

“This has led to new selloff triggers across the ecosystem… Episodes of volatility will likely continue as the crypto sector digests the repercussions of the failed UST peg.”

Stablecoins are meant to hold a fixed value, usually $1 a coin. But some, like Terra, are “algorithmic” stablecoins, which maintain that price by promising to print or destroy currency to meet demand. This approach has been criticized as sharing elements with a Ponzi scheme, requiring regular inflows of new capital to maintain pegs, and subject to a “death spiral” if investors lose confidence.

This death spiral left Terra’s two tokens worthless. UST, the stablecoin, is now trading at less than 20¢, far from its peg to the dollar; and Luna, the free-floating token believed to provide algorithmic stability support, fell from $81 a coin seven days ago to $0.00004 a coin.

The death spiral deepened on Friday morning, when the key players behind Terra agreed to disable the blockchain that powers the system, leaving the remaining holders unable to receive rewards for their participation. At the same time, cryptocurrency exchanges, including Binance and FTX, moved to limit trading in the token, in an effort to protect naive investors from further losses.

It was too late for some. Video game influencer KSI bought Luna for more than $3 million on Tuesday, saying he had “always taken risks…I saw an opportunity and I had to take it.” His holdings are now worth less than $10.

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Despite the crash, the UK government has said it aims to make stablecoins a legal part of the country’s payment infrastructure.

“Our ambition is to make Britain a global hub for crypto-asset technology,” a Treasury spokesperson said, “by creating a regulatory environment in which businesses can invest, innovate and grow. , while maintaining financial stability and regulatory standards to ensure people can use new technologies reliably and securely.

“We are delivering on this ambition – by consulting on a future regulatory regime for crypto-assets, legislating to bring stablecoins into payments regulation, and exploring ways to improve the competitiveness of the UK tax system to encourage market development. crypto-assets. UK.”

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TerraUSD ‘stablecoin’ Removed From List Of Crypto Exchanges | Cryptocurrencies – Tech Tribune France

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