$60 billion collapse of major cryptocurrency is not the industrys Bear Stearns moment — senators and regulators explain why
Summary
Some investors have called the events of the last month a Bear Stearns moment for crypto, comparing the contagion effect of a failed stablecoin project to the fall of a major Wall Street bank that ultimately foretold the 2008 mortgage debt and financial crisis. Both coins were issued by an organization called Terraform Labs, and developers used the underlying system to create other applications such as NFTs and decentralized finance apps. Coin Metrics Nic Carter tells CNBC that no algorithmic stablecoin has ever succeeded, noting that the fundamental problem with UST was that it was largely backed by faith in the issuer. Georgieva also stressed that stablecoins not backed by assets to support them are a pyramid scheme and emphasized that the responsibility falls to regulators to put up protective guardrails for investors. "I think it is likely that were going to have regulation happen faster because of the events of recent weeks," said Securities and Exchange Commissions Hester Peirce, who also noted that stablecoin legislation was already on the docket before the fall of UST.