Terra Luna price spikes on stablecoin crackdown news
The price of the Terra Luna cryptocurrency token jumped 5% in a matter of seconds after news a crackdown on centralised stablecoins could be imminent.
Bloomberg reports that the United States Treasury Department will this week release a highly-anticipated report that will clear the way for the Securities and Exchange Commission (SEC) to crackdown down on stablecoin products like Tether (USDT) and USD Coin (USDC).
Tether’s market cap has grown to more than US$60 billion and has become a target for financial regulators.
Terra Luna’s algorithmic stablecoin (UST), however, operates using an algorithmic system, meaning it is classed as decentralized.
The South Korean creators of the project, Terraform Labs, believe the key point of difference could see UST become widely adopted as an alternative to its centralized competitors.
Terraform labs, however, is also attracting attention from the SEC.
At last month’s Messari crypto conference, its founder, Do Kwon, was served with SEC subpoenas relating its decentralized finance protocol known as Mirror, which allows the trading of “synthetic” assets that track the price movements of real assets.
In response Kwon is suing the SEC, claiming it delivered the subpoena at a crowded conference as a means to “publicly humiliate and embarrass” and that such formal orders of investigation should be confidential.