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US Treasury Official Says Collapse Of Terra And UST Shows How Badly Crypto Needs Regulation

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Crypto Needs Regulations.

A US Treasury official is worried that the crypto industry is growing too fast and becoming too dangerous without proper regulation.

This is in the wake of the collapse of UST and the Terra ecosystem that led to the de-pegging of UST from the one-to-one arrangement with the USD.

Michael Hsu is the Director of the Comptroller of the Currency; during a recent DC Blockchain Summit, he mentioned the de-pegging of UST from USD, saying that this event should be a clear pointer that there need to be regulations in place if the blockchain technology is to achieve its objective.

No Contagion

However, the director expressed his pleasure that the effects of the de-peg didn’t spill over to the banking system. Hsu aimed at yield farming, calling it a type of Ponzi that consumers should be protected from. UST investors were enticed with huge returns during its peak, running up to 20% of their stakes.

Hsu said,

“Yield farming today may have more in common with Ponzi schemes than productive innovation; hype-driven economy presents real challenges for those truly interested in productive innovation in protecting consumers.” 

While Hsu’s approach in the talks was a bit more aggressive than other speakers, there was still a general consensus that the crypto industry needs strong regulatory policies to prevent such events as UST and Terra’s collapse.

He said that OCC would take a conservative approach toward crypto:

“The OCC will continue to take a careful and cautious approach towards crypto in order to ensure the national banking system is safe and sound.” 

As a matter of fact, the lack of proper legal guidelines has hindered the crypto industry from growing to its potential because some institutions choose to stay away. Those getting in are primarily interested in direct investments rather than building utility. The lack of clear regulations has left many potential investors in limbo.

Binance’s head of tax, Sulolit Mukherjee, was among the speakers at the Summit. He said,

“The priority now…is responsible innovation. Good actors and institutional investors are waiting for more clarity in the space.”

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Mark Brennan
Mark Brennan
Mark Brennan has been active in the cryptocurrency sector since 2014. His love and passion for the nascent industry drove him to develop interest in writing about important developments and updates about cryptocurrencies and blockchain. Brennan, who holds a Masters degree in Business Administration, learned about the potential of blockchain technology. Aside from crypto journalism, Brennan runs an education center, where he educates people about the asset class.

Disclaimer: The content is for informational purposes only, may include the author's personal opinion, and does not necessarily reflect the opinion of TheCryptoBasic. All Financial investments, including crypto, carry significant risk, so always do your complete research before investing. Never invest money you cannot afford to lose; the author or the publication does not hold any responsibility for your financial loss or gains.

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