May 30, 2023
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Terra

Japan recommends against algorithmic backing in stablecoins

CoinRegWatch03 mins

The potential legal status of the Japanese Financial Service Agency’s recommendation is not clear as the current legislation is silent on algorithmic stablecoins.

After passing its landmark legislation on stablecoins in June, Japanese regulators are considering complementing it by restricting the algorithmic backing of stablecoins. The intention comes as a recommendation from the Financial Service Agency (FSA) and was repeated by the country’s Vice Minister for International Affairs, Tomoko Amaya. 

During his speech on crypto assets at a roundtable hosted by the Official Monetary and Financial Institutions Forum (OMFIF), Amaya laid out Japan’s regulatory framework, emphasizing the factors of financial stability, user protection, and anti-money laundering/ combating the financing of terrorism (AML/CFT). The speech was originally held in November, but the FSA published the full document on Dec 7.

The 29-paged presentation systemizes the Japanese approach to crypto regulation, formed by several major legislations — the Banking Act, the Payment Services Act and the Financial Instruments and Exchange Act. One familiar with the Japanese regulatory environment couldn’t find anything new at this point, although the accent on differentiating between the “crypto assets” and “digital-money type stablecoins” gives a distinct perspective on the local regulators’ approach to the latter.

Related: Bank of Japan to trial digital yen with three megabanks

Amaya’s speech also doesn’t specify any particular dates or headlines for future legislation. However, at the end of the document, in the “Way Forward” section, the Vice Minister cites the FSA recommendations, reportedly made in October. As the quote goes:

“The proposed review states that ‘global stablecoins must not use algorithms in stabilizing their value’ and strengthens the ensuring of redemption rights.” 

This recommendation would probably be taken into consideration by lawmakers in the future, as the current stablecoins’ regulation, which was passed by Parliament in June and will become law in June 2023, doesn’t cover algorithmic stablecoins. The bill itself came in the aftermath of a massive decline in cryptocurrency markets fueled by the Terra tokens collapse, with the algorithmic stablecoin Terra USD (UST) losing its 1:1 value to the U.S. dollar in early May.

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South Korean prosecutors ban Terra employees from exiting the country: report

South Korean prosecutors ban Terra employees from exiting the country: report

CoinRegWatch04 mins

Employees of Terra have reportedly been prohibited to exit South Korea as investigations by the prosecutors continue.

Terra (LUNA) employees are reportedly unable to leave South Korea as the country’s prosecutors imposed a departure ban on key developers of the project.

Korean media outlet JTBC reported on Monday that an investigation team from Seoul Southern District Prosecutor’s Office has imposed a travel ban on key team members of Terraform Labs. The prosecutors imposed the ban to eliminate the possibility that key officials within the company may go abroad to avoid any further investigation.

The report also highlighted that Terra CEO Do Kwon, who is a key figure in the investigation, is currently staying in Singapore, which is outside of the country. Because of this, the report highlighted that the prosecution may take measures like making Kwon’s passport invalid, before being able to launch a more comprehensive investigation on Kwon.

In a tweet, Terra developer Daniel Hong shared that even former Terra employees have received an exit ban from the government. According to Hong, none of the employees were notified to avoid any possibility of destruction of evidence as the investigation continues.

Hong also expressed disappointment with the ban. According to Hong, the ban shows that the employees are being treated as a criminal and is unacceptable. The developer noted that employees who might’ve been willing to cooperate may have changed their minds because of the ban. 

Related: Appeals court rules Do Kwon, Terraform Labs must heed SEC subpoena served in September

In May, a famous financial crimes investigation unit dubbed the “Grim Reapers of Yeouido” has been revived by the South Korean government to investigate the collapse of Terra. The team will consist of various regulators and will focus on prosecuting fraud and illegal trading schemes.

Meanwhile, the exchanges in Korea have formed a new system that would ensure regulatory compliance and make united decisions to prevent another situation like what happened with Terra. The emergency system will be activated within 24 hours in the event that a case similar to the Terra fiasco appears.

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Can Terra blockchain sustain its growth? Research report digs deeper

Can Terra blockchain sustain its growth? Research report digs deeper

CoinRegWatch04 mins

It only took Terra one year and 22 protocols to become the second-largest DeFi blockchain. How was it achieved, and for how long will it remain on top?

Cointelegraph Research fundamentally evaluates Terra in its 50-page report to provide an in-depth analysis of its recent updates, including Columbus-5, the Bitcoin (BTC) acquisition and others.

Decentralized algorithmic stablecoins, blockchain integration in real-world payments and 20% APYs on decentralized finance (DeFi) protocols — what is all of this, and is it really doing this? The team of experienced crypto analysts from the Big Four and the best universities worldwide dives deep into the blockchain’s ecosystem, community and underlying technology, assessing the potential regulatory, market and technological risks.

Terra is a proof-of-stake blockchain ecosystem that aims to introduce cryptocurrencies as a means of payment to a broad audience. The team has successfully integrated the dual token model, where the minting and burning of the LUNA token control the supply and price of Terra’s stablecoins, including Terra USD (UST), TerraGBP, TerraKRW, TerraEUR and the International Monetary Fund’s TerraSDR.

Moreover, the fluctuations in mining rewards are minimized through transaction fees and LUNA’s burn rate variations. Notably, the rewards are programmed to increase as the blockchain’s ecosystem grows.

Simultaneously, multiple developers are working on innovative decentralized applications (DApp) on top of the Terra blockchain, including Mars Protocol, Anchor and Chai. Numerous companies, such as Kado, have established the payment infrastructure. There are some nonfungible token (NFT) market participants, too, where Levana, Talis and Knowhere are aiming to create a thriving ecosystem. Simultaneously, TFM, a DeFi and NFT aggregator on Terra, aims to unite the whole Terra ecosystem and become the ultimate go-to place for newcomers.

Read the full report on Terra to find out how the blockchain network has developed over the past year.

However, the questions rarely raised by the crypto influencers are the decentralization and regulation issues. Will Terra sustain rapid development with only 130 validators? What would happen if UST, the most abundant Terra stablecoin, was subject to the United States Securities and Exchange Commission’s regulatory measures? Finally, if one of the most popular DApps, the Anchor lending protocol, had crashed at the end of January 2022, how would the continuing development of Terra have been perceived?

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xASTRO staking and upcoming ‘Terra wars’ send Astroport price to new highs

xASTRO staking and upcoming ‘Terra wars’ send Astroport price to new highs

CoinRegWatch03 mins

ASTRO price rallied to a new all-time high after the launch of xASTRO staking and traders’ expectation that the Terra ecosystem will soon wage its own version of the “Curve wars.”

Projects that launch on up-and-coming blockchain networks can often benefit from a low competition environment that allows them to attract  new users and liquidity at a faster rate than crowded networks like Ethereum. 

A recent example of this is Astroport (ASTRO), an automated market maker (AMM) on the Terra (LUNA) network that has seen an influx of activity alongside the increased attention that is being focused on the Terra ecosystem and its Terra USD (UST) stablecoin. .

Data from CoinGecko shows that since hitting a low of $1.28 on March 7, the price of ASTRO has exploded 194% to hit a new all-time high of $4.80 on April 5.

ASTRO/USDT 4-hour chart. Source: TradingView

Three reasons for the price appreciation seen in ASTRO include the increased attention the Terra ecosystem has received related to the recent Bitcoin (BTC) purchases to back UST, the launch of xASTRO staking rewards and a rise in the total value locked on the protocol.

Terra buys Bitcoin as collateral for UST

The rising popularity of the Terra network could be one of the most significant factors helping to attract attention and users to Astroport as the ongoing purchase of BTC by the Luna Foundation Guard (LFG) for the purpose of providing collateral to back UST is shining a light on the networks decentralized finance ecosystem.

UST is now the largest decentralized stablecoin by circulating supply and following the addition of BTC to the LFG treasury, Astroport is the main AMM currently in operation on the network.

Launch of xASTRO

A second development helping to boost demand for ASTRO was the release of xASTRO staking that offers ASTRO holders a way to increase their stack.

ASTRO staking statistics. Source: Astroport

ASTRO stakers can currently earn an APY of 48.77% for staking their tokens on the protocol and 0.1% of all trading fees on Astroport are distributed to ASTRO stakers. More than 65% of the available supply of ASTRO is currently being staked on the protocol which helps put positive pressure on the price of ASTRO due to a reduced circulating supply amid the increasing demand.

Along with a high APY and fee share, ASTRO stakers receive xASTRO in return. xASTRO is the governance token for the protocol and it allows holders to help contribute to future decisions involving the development of Astroport. ASTRO tokens can be un-staked at any time without a cool-down period.

Related: Biggest future BTC whale explains why Bitcoin was chosen for ‘decentralized Forex reserve’

Terra liquidity wars and a rising TVL

The increased attention on Terra and subsequently Astroport led to an increase in the total value locked on Astroport, which is currently at a record-high $1.71 billion according to data from Defi Llama.

Total value locked on Astroport. Source: Defi Llama

The increase in demand for both ASTRO and UST has given rise to the “Terra liquidity wars,” which are expected to mirror the Curve wars that have been taking place within the stablecoin ecosystem on the Ethereum network.

Similar to the competition for liquidity direction and fees on Curve Finance, DeFi protocol Retrograde is positioning itself as a Convex Finance clone that aims to accumulate xASTRO for the rewards and the ability to influence the emission rates for different Astroport pools.

If the number of protocols looking to accumulate xASTRO increases, more of the circulating supply of ASTRO will be locked and this is likely to place more buy pressure on ASTRO price.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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