After the Luna crash in the "coin circle moutai", the virtual currency field is likely to see a more violent storm.
Gary Gensler, chairman of the U.S. Securities and Exchange Commission (SEC), said there will be more turbulence in the crypto market. Last week, the stablecoin UST, whose price was supposed to be pegged to the DOLLAR, suddenly plunged. Its sister currency, Luna, saw its value drop almost overnight, wiping out many investors.
Gensler said more investors are likely to get hurt in the future, and cryptocurrencies will also face tighter regulation.
Screenshots of foreign media reports
Last week, Terra USD (USD), the crypto market's third largest stabler, unexpectedly crashed in value. Meanwhile, its sister currency Luna, used to absorb UST price shocks, has also taken a beating, with its value almost down to zero.
Investors in UST and Luna lost a combined $42 billion over the past week as the two cryptocurrencies plummeted, according to Elliptic, an analytics firm. The impact of the incident soon out of the circle, triggered a discussion from all walks of life.
LUNA Price Trend
Securities and Exchange Commission Chairman Robert Gensler made his concerns public during a House Appropriations Committee hearing on Wednesday. "I think a lot of these tokens will fail... I'm worried that a lot of people are going to get hurt in the crypto space. That would undermine confidence and trust in the markets."
The once-hot cryptocurrency market is quietly changing. The cryptocurrency market has lost more than $1 trillion in value in the past six months as the Federal Reserve has adjusted its monetary policy and increased regulation of cryptocurrency-related technologies. This month's UST and Luna thunderstorms have further rattled the market.
In the view of the industry, the coin sphere earthquake may even spread to other asset classes. Rostin Behnam, chairman of the US Commodity Futures Trading Commission (CFTC), said on Monday that there could be a "ripple effect on traditional assets and traditional markets" if cryptocurrency prices fall significantly.
In all circles of attention, "cryptocurrency" may face a stricter regulatory environment.
Earlier this month, the SEC said it planned to add 20 investigators and litigators to its corresponding unit dedicated to cryptocurrency and cybersecurity enforcement, which would almost double the size of the unit. At Wednesday's hearing, Gensler was trying to get more money for the SEC.
Mr Gensler said the SEC could use its powers to tighten regulation if necessary: "We are talking to the exchanges about two things: registering the platforms and providing a pathway for tokens, but they move in the direction of registration."
"We're going to be cops on the beat, and we're going to take enforcement action."