Mining of stablecoins such as TerraUSD will be banned in the US

The US government has drafted a new bill that would ban the issuance of algorithmic stablecoins, such as Do Kwon's infamous TerraClassicUSD (USTC) project.

The ban applies to stablecoins whose value depends on the cryptocurrency rate created by the same development team. The draft law provides for criminal liability for the creation of new stablecoins of this kind.

In addition to the ban on the issuance of algorithmic stablecoins, cryptocurrency companies will be required to keep client funds separate from the firms' assets to protect investors' money in the event of bankruptcy. Obviously, the collapse of Terraform Labs and the problems with its founder Do Kwon are affecting the regulatory policy on cryptocurrencies around the world.

Thus, according to Jake Czerwinski, executive vice president and head of policy at the Blockchain Association, Terra’s failure is forcing the regulator to establish strict supervision over the digital asset market.

It's hard to overstate the damage that Terra has done to the perception of crypto in DC.

Many policymakers already disliked the notion of a permissionless digital marketplace & wanted to put all of crypto into a well-sealed box.

Terra gave them (un)just cause to push forward.

— Jake Chervinsky (@jchervinsky) September 19, 2022

As a reminder, the collapse of the Terra ecosystem had a negative impact on the entire cryptocurrency market. Do Kwon and Terraform Labs are still subject to many lawsuits. Currently, South Korean authorities are considering revoking Do Kwon’s passport and terminating his citizenship. The country’s prosecutor’s office even asked Interpol to issue a red notice to the Terraform Labs CEO. This happened after Singapore confirmed the information that the developer had left the country, although Kwon claimed that he had no intention of fleeing from law enforcement.