Recent Terra Ecosystem Collapse Draws G7 to Discuss Crypto Regulation

Key Insights:

• G7 countries to discuss further crypto regulations following Terra’s failure.
• French central bank head called the recent crypto crash a “wake-up call” for global regulators.
• Other nations like South Korea have already started investigating cryptos following the incident.

The Group of Seven (G7) countries would place global crypto regulations under high priority in the upcoming meeting in Germany. 

Finance ministers and central bankers would join the meeting in the German cities of Bonn and Königswinter, starting Wednesday. G7 countries include the United States, Canada, Japan, Germany, France, Italy, and the United Kingdom.

Terra ecosystem downfall alerts regulators worldwide

Per a Reuters report, French central bank head Francois Villeroy de Galhau said Tuesday that officials from G7 countries would likely discuss crypto regulations this week.

Speaking at an emerging markets conference in Paris, he called the recent crypto market fluctuations caused by Terra (LUNA) and TerraUSD (UST) a “wake-up call.” He noted that the turbulence has led to “the urgent need for global regulation.”

“Europe paved the way with MICA (regulatory framework for crypto-assets), we will probably discuss these issues among many others at the G7 meeting in Germany this week.”

The G7 officials started discussions on crypto regulations in December 2020. However, the discussions focused on their use for malign purposes and illicit activities and the prospects of central bank digital currencies (CBDCs).

Francois said that the “disorderly development of crypto-assets” and the “misnamed stablecoins” pose risk of fragmentation in the financial system. Calling those “very unstable,” he added,

“Crypto assets could disrupt the international financial system if they are not regulated, overseen, and interoperable in a consistent and appropriate manner across jurisdictions.”

Global regulators conduct urgent crypto “trend check”

Financial regulators worldwide are initiating investigations on crypto price trend due to recent events that shook the entire crypto industry.

For instance, South Korean financial authorities launched an emergency check on crypto trends. They enacted the “Basic Act on Digital Assets” that includes consumer protection under such high price volatility circumstances.’

As reported by Yonhap News, a South Korean financial authority said,

“We are monitoring the overall situation and checking trends in relation to the Luna incident. But there is no means for the government to respond immediately.”

Additionally, Yun Chang-Hyun, a representative from ruling People Power Party, has necessitated a parliamentary hearing of Terra founder Do Kwon.