[Asia Economy Reporter Lee Jung-yoon] Following the collapse of Luna and TerraUSD (UST), domestic cryptocurrency exchanges are warning investors to exercise caution when investing in stablecoins or related coins.
On the 22nd, according to the cryptocurrency industry, major exchanges posted notices advising caution when investing in algorithmic stablecoins or related cryptocurrencies. Upbit and Bithumb currently support trading in 13 and 10 stablecoin-related items, respectively. Coinone and Korbit support trading in 8 and 6 items, respectively, including Luna. Gopax delisted Luna and TerraKRT (KRT) on the 16th and no longer supports stablecoin trading.
Upbit stated in its notice, "As revealed by the recent sharp price fluctuations of Luna, if there is a sudden change in the collateral value of stablecoins or digital assets linked to stablecoins, or if the algorithm does not operate properly, rapid price fluctuations may occur," adding, "Please exercise caution when investing in related digital assets."
Bithumb also said, "Algorithmic stablecoins, like in the Luna price crash, can experience rapid price fluctuations if the embedded algorithm does not function as intended," and "We are continuously monitoring the functions and price fluctuations of stablecoins and related virtual assets."
Additionally, Coinone and Korbit provided warnings and investment cautions regarding algorithmic stablecoins and related cryptocurrencies.
Previously, when the price of UST, a stablecoin designed to be pegged to 1 dollar, plummeted, the price of its sister coin Luna also dropped, causing a major crash. Unlike other stablecoins backed by safe assets such as cash or government bonds, Terra applied an algorithm that maintained its value through Luna. However, due to concerns about economic recession, the prices of Terra and Luna fell, ultimately leading to a major crash.
Meanwhile, the Financial Services Commission and the Financial Supervisory Service recommended actively informing domestic exchanges to monitor trends related to stablecoins and to alert users regarding the Luna incident. Currently, financial authorities do not have legal authority to supervise. Therefore, the authorities are urging exchanges to provide sufficient notifications to consumers to prevent further damage.
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