The UST crash has raised global regulatory concerns, and the crypto market is facing new challenges.

Recently, the dollar algorithmic stablecoin UST in the Terra ecosystem experienced a severe depegging event, causing a huge impact on the crypto market. This event not only affected the internal crypto field but also attracted high attention from global regulatory agencies.

UST fell from $1 to $0.04 in just 5 days, a decoupling of up to 97.7%. The associated LUNA coin went to zero directly, with its market value plummeting from $119 in early April to nearly zero. This event is regarded as one of the most destructive collapses in the history of encryption.

As the impact of the UST collapse continues to spread, regulatory agencies in various countries are responding rapidly. The South Korean Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) have launched emergency inspections of local crypto exchanges, demanding information related to transactions involving UST and LUNA. South Korean politicians are also calling for a parliamentary hearing on the matter to explore the causes of the incident and investor protection measures.

On the American side, the Treasury Department is reviewing legislative proposals regarding stablecoins. The Federal Reserve specifically mentioned the issue of stablecoins in its latest Financial Stability Report, while the Securities and Exchange Commission (SEC) emphasized the principles of investor protection. Treasury Secretary Yellen pointed out that the fate of UST highlights the necessity of implementing bank-like regulation on stablecoin issuers.

European countries have also started to take action. The UK Treasury has confirmed that it will regulate stablecoins on the condition of supporting innovation, but has made it clear that algorithmic stablecoins are not included. The Governor of the French central bank revealed that the issue of cryptocurrency regulation will be discussed at the upcoming G7 meeting.

Industry experts believe that existing financial regulatory laws can and should be used to address the risks associated with stablecoins. Some suggestions state that stablecoin issuers either need to obtain banking qualifications to become regulated deposit institutions or register as regulated money market funds.

The recent UST collapse may become a turning point for cryptocurrency regulation. Regulatory agencies are accelerating the development of relevant regulations to enhance investor protection. Meanwhile, leaders in the encryption industry are also beginning to focus on the construction of a more comprehensive regulatory framework.

As the global regulatory environment tightens, the cryptocurrency market is facing new challenges and opportunities. How to promote industry innovation while protecting investors' interests will become an important issue that regulatory agencies and market participants will jointly face in the coming period.