The US Congressional Research Agency comments on UST stablecoin and implies that it has regulatory liabilities.
The Congressional Research Service, a public policy research institute of the US Congress, has shared a recap of the current algorithmic stablecoins' situation in the crypto world and outlined several significant points.
The colossal fall of UST prices has revealed a “run-like” case where many shareholders and traders have taken out their investments at the same time, thus generating bad numbers in the statistics. So, the CRS suggests that a "run" situation occurs when investors are doubtful about the reserves backing the asset's dollar peg.
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On top of that, as the traditional financial system components such as banks and credit unions have their own regulations to avoid such “run-like” occurrences, the stablecoin industry does not implement any measures, whatsoever.
During the past few weeks, the UST stablecoin has crashed significantly and hit a new low. Now, it is estimated at $0.12 as it lost its peg to the dollar. Last year in June, The Iron Titanium (TITAN) token experienced a similar case when its value almost fell to zero in only one day.
On May 12, the CEO of Seoul-based company Terraform Labs Do Kwon suggested a plan to save UST from complete destruction. He stated that the minting capacity will be increased from almost $300M up to $1.2 billion and the base pool will be raised from 50M to 100M SDR.
