More than $200 billion erased from entire crypto market in a day

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Regulators are growing anxious about stablecoins after Terra’s stunning collapse

• TerraUSD, an “algorithmic” stablecoin that’s meant to be pegged one-to-one with the dollar, plunged below $1 this week.
  
• Tether, the world’s biggest stablecoin, also temporarily “broke the buck” on Thursday.
  
• U.S. Treasury Secretary Janet Yellen has urged Congress to approve federal regulation of stablecoins.
  

Regulators are getting increasingly worried about stablecoins after the collapse of controversial cryptocurrency venture Terra.

TerraUSD, an “algorithmic” stablecoin that’s meant to be pegged one-to-one with the U.S. dollar, has erased much of its value this week after a stunning run on the bank that saw billions of dollars suddenly evaporate from its market value.

Also known as UST, the cryptocurrency operated using a complex mechanism of code combined with a floating token called luna to balance supply and demand and stabilize prices, as well as a multibillion-dollar pile of bitcoin.

Tether, the world’s biggest stablecoin, also slipped below its intended $1 for several hours on Thursday, fueling fears of a possible contagion from the fallout of UST de-pegging. Unlike UST, tether is supposed to be backed by sufficient assets held in a reserve.

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