Last Week in Crypto: Stablecoin Meltdown, CBDCs and UK Ambitions

By | May 16, 2022


Last week in crypto will go down in history as one of the most turbulent ever. Be[In]Crypto has rounded up the hottest stories in the ecosystem for your digest ranging from Terra’s debacle, CBDCs rush, the U.K.’s cryptocurrency ambitions, crypto fraud, and investors’ sentiment following the aftermath of Terra USD (UST) de-pegging.

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UST’s de-pegging sends shockwaves through the cryptoverse

This week was a chaotic one for investors in the cryptocurrency space as they had to grapple with the news of the UST stablecoin de-pegging from the U.S. dollar. Some quarters described the de-pegging as a “coordinated attack,” dragging Terra (LUNA) to lows of $0.0001675 from previous highs of $119.18.

Following the events, Binance, the largest cryptocurrency exchange, suspended withdrawals of LUNA and UST on the platform citing “network slowness and congestion.” Binance pledged to resume withdrawals of the tokens at a time when they “deem the network to  be stable and the volume of pending withdrawals has reduced.”

The Luna Foundation Guard (LFG) tried pulling several strings to prop the UST stablecoin as it looked to raise over $1 billion to collateralize UST. The project’s founder, Do Kwon broke his silence with a heartfelt apology to the entire community and stated that neither he nor any institutions affiliated with him “profited in any way from this incident.

Despite the chaos of the last week, Kwon noted that “the Terra community must reconstitute the chain to preserve the community and the developer ecosystem”. However, Dogecoin’s co-founder advised Kwon that he should “leave the space forever” and “stop trying to bring in new victims to fund the previous victims.”

CBDCs are running riot

Central bank digital currencies (CBDCs) are riding a strong wave with Tanzania set to roll out its own CBDC. According to the country’s central bank governor, the move is geared toward protecting the citizens from “cryptocurrency speculators”.

A report by the Bank for International Settlements (BIS) indicates that over 90 central banks around the world are considering working on CBDCs. The report showed that 26% of the central banks are already running their pilots while 80% are at the proof-of-concept stage.

CBDC Crypto

Nigeria, the first African country to launch its CBDC back in 2021, has extended the use cases of the digital currency to include bill payments like cable television, flights, and electricity bills. In China, the digital yuan has found increasing usage in the transportation sector in the cities of Xiamen and Guangzhou.

Despite the interest in CBDCs, Israel’s central bank is showing cold feet in moving ahead with the development of digital currencies. The bank has decided to sit on the fence rather than picking a side with experts attributing it to the ambivalent attitude to cryptocurrencies. On the other hand, Chile has postponed the issuance of its CBDC in order to scrutinize the negative loopholes that a digital peso might bring to the economy.

The UK sets sight on becoming crypto hub

The United Kingdom is inching towards becoming one of the pro-crypto country’s in the world. The Queen’s Speech delivered to parliament sparked a renewed interest in cryptocurrencies as it proposed a bill to regulate the ecosystem and get rid of bad actors.

U.K. Sees Positive Outlook on Industry as It Seeks to Become 'Global Hub for Crypto Asset Technology' - beincrypto.com

Experts have suggested that Brexit might prove to be a good move for the U.K.’s cryptocurrency ecosystem. Their hypothesis hinges on the fact that the EU has begun implementing stringent cryptocurrency regulations and it is the “first-time post-Brexit for crypto to have legislation that will enable all of its key ambitions,” said one expert.

Her Majesty’s Treasury had previously indicated plans to be a “global crypto hub” following the developmental strides in the United Arab Emirates and Switzerland. Furthermore, John Glen, the Economic Secretary to the Treasury, has also hinted toward renewed cryptocurrency adoption in the country with scheduled visits to Switzerland and meetings with cryptocurrency executives.

Authorities struggle to rein crypto fraud

This week, European law enforcement agencies launched a renewed effort to apprehend Ruja Ignatova, the self-styled Crypto Queen. Ignatova was the brains behind OneCoin, a cryptocurrency that ended up being one big Ponzi scheme costing investors billions of dollars.

Bitcoin BTC Fraud Crypto

The State Criminal Police Office of North Rhine-Westphalia (LKA-NRA) in Germany, the Federal Criminal Police (BKA), Europol, and Interpol are part of the massive manhunt to smoke out Ignatova. A reward of up to 5,000 euros has been offered to the public for any information leading to her arrest.

Hackers have begun targeting crypto data aggregator websites in a new phishing attempt that asks users to connect their MetaMask wallets. The phishing attempts affected the websites of CoinGecko, Etherscan, and Dextool with the phishing code being integrated into an advertisement from Coinzilla, a leading cryptocurrency ad network.

Other stablecoins quaver after UST’s torrid week

As the cryptoverse struggled to come to terms with the reality of UST de-pegging, other stablecoins showed signs of instability. Tether (USDT), the world’s largest stablecoin slumped to $0.95 before regaining its peg but $3 billion worth of tokens had already left the system.

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According to Mati Greenspan of Quantum Economics, the incident with Terra had “shaken” the belief of investors in stablecoins. Across the wider markets, the global cryptocurrency market cap is $1.28 trillion while bitcoin (BTC) shed over 15% of its value and reached lows of $26,700. El Salvador took advantage of the dip to add 500 BTC to its holdings bringing its cache to well over 2,000 BTC.

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