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HUSD comes out stronger after liquidity issues addressed

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Stablecoins including HUSD lost their peg over the past few months, contradicting their concept. It has survived up to this point despite Terra’s irritation with the idea. Another asset lost its peg yesterday as officials worked to supervise the stablecoin market. HUSD, a stablecoin that was formerly supported by Huobi, fell as low as $0.84. But as of late, the cryptocurrency platform said that its liquidity problem has been resolved.

It should be highlighted that the company issuing HUSD is Stable Universal Limited, a startup funded by Huobi. Huobi made the decision to end the initiative in April. The company did, however, acknowledge and deal with the stablecoin’s liquidity crisis.

The crypto platform released a tweet earlier today proclaiming the resolution of the stablecoin’s liquidity problem.

Source: Twitter

The exchange also advised consumers to exercise some caution due to the market volatility for cryptocurrencies. Huobi stated:

“Given the recent volatility in the cryptocurrency market, we advise our users to pay close attention to and be aware of potential risks.”

The community wasn’t surprised by this one after the failure of several stablecoins. However, regulators can use the most recent price change in HUSD to enact harsher rules.

Regulators from all across the world were notified of Terra’s failure, along with that of its algorithmic stablecoin TerraUSD. These assets’ low volatility had not previously presented a concern. But after the Terra disaster, everything changed completely. Stablecoin inclusion in existing rules is already being considered by some nations, notably South Korea. The UK appears to be doing the same.

HUSD might be getting back on track

The volatility of the crypto-verse is well known throughout the entire world. Stablecoins, on the other hand, came as a blessing for individuals who worry about sharp price changes. But something appears to have disturbed this idea.

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Source: Coin Market Cap

HUSD was gradually making progress yesterday after hitting a low of $0.8439. The stablecoin was getting closer to its $1 peg after an 18% increase. The asset’s price was $0.9971 at the time of writing, up 7.96% over the last 24 hours.

Following the Fall of LUNA, Singapore Watchdog To Lay Down Stablecoin Regulation

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Following the fall of Terra, LUNA, and the entire Do Kwon ecosystem, countries are pushing regulations on crypto and stablecoins.

The main financial watchdog for a city-state, the Monetary Authority of Singapore (MAS), evaluates the benefits of a regulatory framework for stablecoins.

The KYC concerns that are the focus of current regulations do not take into account the unique dangers that stablecoins are subject to.

Regulatory head of Singapore illustrated the high risks that followed LUNA’s fall

On Monday, the MAS official homepage posted a written statement from Tharman Shanmugaratnam, the regulator’s chief, in response to a query from a Singaporean lawmaker.

The inquiry asked whether there was information on how exposed Singaporeans were to the recent decline in the value of the TerraUSD Classic (USTC) stablecoin and the Luna Classic (LUNC) token and if the MAS was actively thinking about ways to address future crises of this nature.

Shanmugaratnam recognized that the Terra collapse serves as an example of the severe dangers associated with investing in cryptocurrencies, but he emphasized that the unrest has not adversely impacted the economy or the mainline financial system.

The majority of the official response described MAS’s existing plans for stablecoins.

The current framework, in which stablecoins, along with other cryptocurrencies, are being deemed digital payment tokens (DPTs), doesn’t address the unique hazards, according to him, thus MAS is actively examining its approach to the regulation of stablecoins.

As a result, MAS “is evaluating the advantages of a regulatory system” particular to the features of stablecoins.

It will concentrate on issues including controlling reserve requirements and peg stability. As stated in the answer, MAS plans to consult the public in the following months regarding the guidelines.

The ties between LUNA’s TerraForm Labs, Three Arrows Capital (a cryptocurrency hedge fund currently facing bankruptcy procedures), and Singaporean crypto regulation were officially denied on July 19 by Ravi Menon, the managing director of MAS.

Menon also stressed the need for the regulatory attention to be shifted away from KYC/AML and onto the more complex threats presented by cryptocurrencies in his address.

Terra co-founder’s home raided by S.Korean prosecutors

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While the Terra collapse has stirred confusion in the Crypto world, South Korean officials are determined to probe fraud charges of the same.

According to a story in the Korean media, authorities on Wednesday conducted a raid at the Seoul residence of Daniel Shin, the co-founder of Terraform Lab.

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Terra co-founders Daniel Shin and Do Kwon

Additionally it was stated that the raid was carried out as part of a larger inquiry into claims that fraud was to blame for the collapse of the stablecoin.

In May, the stablecoin abruptly deviated from its peg to the US dollar, triggering a cascade that affected the whole industry and led to the overexposure of a number of hedge funds and exchanges. A complaint was made against the founding company and co-founder Do Kwon in the same month by several investors in the South Korean-based Luna (LUNA) cryptocurrency, accusing them of fraud and breaking regional securities rules.

Terra’s collapse caused havoc in the lives of its employees

Prosecutors imposed a travel ban on a large number of the firm’s associates, including former employees, in June. The office did not identify the individuals subject to the one-month travel ban, although they may include current and former employees as well as developers. In order to protect their ongoing investigation, prosecutors declined to offer more information.

Furthermore, the collapse of TerraUSD and Luna, according to research by the Bank of Korea, South Korea’s central bank, was a major reason why the global currency market shrank by more than 40% from late last year when its market value had risen to almost $2.3 trillion. The recent increase in the U.S. Federal Reserve’s benchmark interest rate to combat inflation has also aided in the decline by driving away investors from risky assets, according to the bank.

According to Yonhap News Agency, authorities looking into a fraud case related to the downfall of algorithmic stablecoin also conducted raids, earlier this week, at seven cryptocurrency exchanges in South Korea.

According to the report, eight private residences and business locations were searched along with Bithumb, Upbit, Coinone, and four other local exchanges.

In order to determine if the founder of the Labs, Do Kwon, is responsible for purposefully causing the collapse of UST and LUNA, investigators are currently grabbing evidence from the raids.

Stablecoin Purchases in Argentina Seem to Have Tripled Amidst Economic Crisis

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Investors in Argentina bought two to three times as many stablecoins over the weekend compared to the average, according to the country’s crypto firms. This is following the departure of Argentina’s economic minister, Martin Guzmán, on Saturday amid an economic crisis.

The Argentine peso (ARS), whose purchasing power has fallen over the previous year as inflation has soared, is reportedly under threat of devaluation, according to three major cryptocurrency exchanges.

The peso lost value against the stablecoins DAI and tether after Guzman’s departure by roughly 15% on the platforms of many major local exchanges.

From ARS 245 on Friday to ARS 280 during the weekend, both stablecoins increased in value. Tether quotes on Argentine pesos have dropped after Silvina Batakis was appointed as the country’s new economics minister late on Sunday.

Inflation in Argentina rose by over 60% year after year

Guzmán’s departure is the latest repercussion of a dispute between Argentine President Alberto Fernandez and Vice President Cristina Fernández de Kirchner over the country’s economic course, which led to a 60 percent increase in inflation in May compared with the same month last year.

Additionally, the central bank of Argentina is running low on foreign exchange reserves, which has a negative impact on imports, among other things.

According to the corporation, “many people” used their DAI as collateral to secure loans in Argentine pesos and buy more DAI as insurance against a prospective peso depreciation. The Argentine exchange Buenbit reported a 300 percent spike in trade on Sunday compared to the same day in prior weeks.

According to many local media sources, the government might declare a foreign exchange break on Monday to soothe markets. Most Argentine exchanges boosted the margins between the bid and ask prices to 18%, while normally they are under 2 percent, as a result of the absence of price references for the U.S. dollar over the weekend.

Cardano’s Stablecoin Djed Is Just Around the Corner; Details

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The Cardano ecosystem is bursting with a lot of activities. The next project in the lineup is Djed, its algorithmic stablecoin after its successful launch of the testnet version, a few weeks back.

In accordance with recent updates shared by its team, Djed would be deployed to the mainnet once the Vasil Hard fork and the final audits are complete.

Djed, a crypto-backed algorithmic stablecoin that operates as an autonomous bank, was launched on testnet on May 4. Developed by Cardano’s IOG and issued by COTI. It employs SHEN as a reserve coin and is backed by ADA.

Named after an Egyptian symbol that represents stability, the reserve coin, SHEN counters ADA price volatility by covering deficits and ensuring the collateralization rate.

To mint Djed, users must interact with a smart contract by sending ADA to its address. The token will then be returned to the user via smart contract.

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Cardano's Stablecoin Djed Is Just Around the Corner; Details 4

Immediately after the testnet launch of the stablecoin, a level 2 audit certification of the on-chain code was conducted to remove any chances of security vulnerabilities and ensure that the specification and code are of good quality in terms of understanding and maintainability.

Over 514k Cardano’s Djed Has Been Minted

The blog also states that over 514k Djeds have been minted on the platform. In addition, 6,688,918 SHEN reserve coins were minted, giving a reserve ratio of 653%.

At the moment, corrective steps have been applied accordingly, and a new version of the code is being submitted for a final audit.

In an earlier report by TronWeekly, the Vasil testnet hard fork proposal has been submitted. These changes is slated to reflect on the testnet by July 3.

After the Vasil hard fork is implemented to the Cardano testnet, “staking pool operators [SPOs], developers, and exchanges will have roughly four weeks to test an upgrade before the mainnet is hard forked,” IOHK, the R&D team revealed.

Recently Cardano’s token ADA went live on one of Canada’s biggest exchanges Netcoins along with SOL, DOT and GALA. However on the price front, ADA is languishing near $0.44, almost 85% down since its all-time high of $2.9.

Another Stablecoin Bites The Dust? MIM Project “Nearly Insolvent”

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Magic Internet Money [MIM] is a stablecoin soft-pegged to the US dollar and minted by the money lending platform Abracadabra. Owing to the current market upheaval that has capsized the stablecoin projects, the asset is too on the verge of near insolvency.

Market observer Autism Capital released a series of tweets detailing what went wrong. First, during the Terra fallout, the protocol behind MIM- Abracadabra created a bad debt of $12 million to cover the protocol’s MIM liabilities.

Abracadabra reportedly took down their analytics dashboard to “upgrade” it which Autism Capital found odd.

The analyst then accused the MIM core team of failing to pay back the bad debt out of the MIM treasury and resorting to buying CRV instead. The price of CRV has been in a downward spiral and there is no way to check the bad debt trapped in the protocol with the dashboard down, it alleged.

We’re concerned that the protocol could become insolvent, either through the MIM treasury continuing to dump in value or more bad debt created. At that point, the rational thing to do for any MIM holder is to dump it, as the last person holding the bag would get nothing back.

MIM is not the latest stablecoin to de-peg in the ongoing crypto crash. As reported by TronWeekly, TRON [TRX] and WAVES algorithmic stablecoins projects- USDD and USDN too lost their peg.

Stablecoins’ Future Looks Bleak?

Looking at the rate at which these assets class are mired with near insolvency, it is uncertain what lies ahead for those projects. To add to that, recently Dogecoin’s co-founder Billy Marcus made a controversial statement that 95% of the cryptocurrency projects are scams.

Through his Twitter handle, Billy Markus, co-founder of DOGE said, “the reason why people think crypto is 95% scams and garbage and most crypto people are assholes is that crypto is 95% scams and garbage and most crypto people are assholes.”

Adding, “Let’s change that. it starts with you – what you support, and how you behave.”

Elon Musk, a well-known DOGE advocate replied back with a laughing emoji. Following the crypto crash, Doge has fallen by over 65% in less than 2 months.

UK Double Down On Stablecoin Regulations Fearing “Knock-On Effects” of Terra’s Collapse

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UK government has outlined amending current rules to mitigate “systemic” risk posed by stablecoins firms and wants to ensure that the dramatic fallout of the Terra project does not seep into the wider financial system.

TerraUSD, a so-called “algorithmic” stablecoin, crashed earlier in May, taking its sister token Luna with it. Since then the entire crypto market is engulfed in panic, erasing hundreds of billions of dollars from it.

Even Tether, the world’s biggest stablecoin, saw its circulating supply plunge from a record $84 billion on May 11, fueling fears of a 2008-style “bank run” with knock-on effects for other financial markets.

That has, in turn, caused concern for regulators, who are worried about the risks posed by stablecoins to the broader financial system. 

It is to be noted that the latest plan is different from previously announced plans to regulate stablecoins under laws governing electronic payments. The government said in a consultation paper setting out its proposals.

“Since the initial commitment to regulate certain types of stablecoins, events in crypto-asset markets have further highlighted the need for appropriate regulation to help mitigate consumer, market integrity, and financial stability risks.”

“The government considers that it is important to ensure existing legal frameworks can be effectively applied to manage the risks posed by the possible failure of systemic DSA [digital settlement asset] firms for the purposes of financial stability.”

UK’s Bank of England Will Be Given More Power

In addition to that, the UK authorities are working to implement additional safeguards to existing legislation around the insolvency of firms operating key financial market infrastructure. Such a provision would take into account the return or transfer of the private keys that protect users’ funds.

The Bank of England would serve as the lead regulator enforcing the rules. A consultation on the proposal is currently in progress and will close on Aug. 2.

Not only in the UK but Regulators around the world are also working towards bringing effective regulatory controls. Recently Chinese state media outlet, the Economic Daily, has signaled that the Chinese government may introduce even tighter regulations on cryptocurrencies and stablecoins due to the collapse of the Terra ecosystem. 

MoneyGram Strikes Partnership With Stellar to Launch a Stablecoin Remittance Service

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MoneyGram International, one of the world’s leading cross-border transfer businesses, has teamed up with the Stellar blockchain to develop a stablecoin-based money transfer platform. Users of Stellar wallets will be able to send Circle’s USD Coin (USDC) to receivers who will be able to utilize the MoneyGram network to cash them out for their native fiat currency.

“We’re trying to be a bridge from the crypto world to the fiat world.”

MoneyGram CEO Alex Holmes said in an interview.

It is also in talks with third-party companies in El Salvador to offer digital wallets in addition to the Chivo wallets, which were released last year when the country made Bitcoin (BTC) legal tender. If it can reach an arrangement with one of these companies, it will be able to compete for BTC transfers.

MoneyGram praises El Salvador

“If a country like El Salvador is going to make Bitcoin seamless with US dollars in country, I think that consumers, through MoneyGram, should be able to transfer Bitcoin to El Salvador or transfer dollars and convert them to Bitcoin.”

Holmes spoke to Bloomberg

The decision comes as remittances become increasingly common in emerging economies, as well as heightened scrutiny of stablecoins that are supposed to maintain a 1-to-1 relationship with a commodity or currency like the US dollar.

Users with Stellar blockchain digital wallets will be able to convert their holdings to Circle Internet Financial’s USDC stablecoin once MG starts the service. The service can be used to convert the stablecoin to fiat currency.

MG has a previous deal with Ripple Labs, which previously held a large number of the company’s shares. Ripple and MoneyGram dissolved in March 2021, shortly after Ripple was sued by the Securities and Exchange Commission of the United States. A class-action lawsuit was filed against MoneyGram in March 2021 as a result of their partnership with Ripple.

In October 2021, MG and Stellar began working together, and a trial service was released in November. There had been speculations earlier in the summer that Stellar was interested in purchasing MoneyGram.

UK Eyes Stablecoin Regulation Amidst Terra Chaos

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The UK Treasury has declared that it is open to stablecoin regulation for payment purposes but that algorithmic stablecoins would be excluded due to their lack of stability. Only stablecoins backed by fiat currencies will be considered. This comment is in line with the queen’s son Prince Charles’ Tuesday speech, which included fiscal issues.

The Government has been clear that certain stablecoins are not suitable for payment purposes as they share characteristics with unbacked crypto assets. We will continue to monitor the wider crypto asset market and stand ready to take further regulatory action if required.

A spokesperson from the Exchequer

The Queen also addressed the growing cost of living that many Britons are facing as a result of the pandemic, with inflation approaching 10% and energy prices rising.

UK government has been cautious with the decision

Chancellor of the Exchequer Rishi Sunak suggested stablecoins and central-bank digital currencies might enhance payment processing networks in a speech on November 9, 2020.

If the UK government changes current electronic money legislation to meet stablecoins, the Financial Conduct Authority will regulate them.

So far, the watchdog has stayed cautious by allowing just a small number of bitcoin businesses to open shop in the UK, forcing other businesses with insufficient AML checks to operate abroad. Last month, the Treasury’s economic secretary remarked, “The UK is open for business and opens for crypto trade.”

“The UK financial services business must always be at the forefront of technology and innovation,” Sunak says. To represent the UK government’s forward-thinking position on the crypto business earlier this year, Sunak commissioned the Royal Mint to create a non-fungible token (NFT) before summer 2022.

The untimely tragedy of the Terra and LUNA algorithmic stablecoins has cast a pall on what was once thought to be a secure haven for cryptocurrency investors.

Senator Pat Toomey of Pennsylvania has called on the federal government to regulate stablecoins in the wake of Terra’s “bank run,” which depleted the company’s liquidity reserves and sent shockwaves across the crypto market with significant selloffs.

Justin Tron’s DAO amass 600M TRX & 500 BTC echoing Nayib Bukele’s ‘Buy The Dip’

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Justin Tron’s DAO is the latest to join the ‘Buy the dip club’ netting 600 million TRX and 500 BTC worth $45 million and $15 million, respectively, mirroring El Salvador’s recent buy the dip move.

The Tron DAO Reserve took to Twitter to explain that TRX and USD are sailing amidst high market volatility and that its main goal is to “safeguard the overall blockchain industry and crypto market.

Adding it intends to “prevent panic trading caused by financial crises, and mitigate severe and long-term economic downturns.”

Founded in September 2017 by H.E. Justin Sun, the TRX network hosts the largest circulating supply of USD Tether stablecoin across the globe, overtaking USDT on Ethereum since April 2021. The network completed full decentralization in December 2021 and is now a community-governed DAO.

Tron’s stablecoin project launched

Most recently, the algorithmic stable coin USDD was announced on the TRON blockchain, backed by the first-ever crypto reserve for the blockchain industry – TRON DAO Reserve, marking its’s official entry into decentralized stablecoins.

Apart from that, the DAO Reserve plays the role of a lender of last resort to market participants and maintains reserve assets of various blockchains and blockchain-powered financial institutions. It also manages the permissions of USDD as its early custodian.

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On May 5, Tron’s algorithmic stable coin USDD went live and so far, the fiat-pegged token has been listed on a number of decentralized finance [DeFi] protocols.

Two days later, the DAO Reserve announced it has bought 504.6 million TRX to fuel the algorithmic stablecoin.

The project has a number of partners now and USDD is listed on Pancakeswap, Kyberswap, Sunswap, Sun.io, Curve Finance, Uniswap, and Ellipsis.

Tron’s USD stable coin runs in a similar fashion to that of Terra’s UST mechanism, which is backed with Bitcoin and TRX cryptocurrencies. But with Terra’s recent fall from grace and the broken dollar peg spooking the broader market sentiments, it might not look feasible of keeping a stable peg to the dollar.

Previously, The TRON DAO Reserve has announced Alameda Research as the first Member and Whitelisted Institution to mint Decentralized USD [USDD], a fully decentralized stablecoin supported by mathematics and algorithms.