UST Crash Won’t Stop the Industry, Says Morgan Stanley Exec

Financial services experts are confident that the digital asset industry will bounce back quickly after this month’s TerraUSD meltdown, they said during a panel discussion at the Permissionless conference in Palm Beach. 

“I don’t think we’re going to miss a beat here,” Amy Oldenburg, head of emerging markets equity at Morgan Stanley Investment Management, said in response to a question about how the situation might impact digital asset adoption. 

Algorithmic stablecoins are especially complex, and UST’s crash likely influenced institutional players to take a closer look at the technology behind the tokens, Jessica Raybeck, head of institutional relationship management at BlockFi, said.

There will certainly be increased scrutiny around the stablecoin industry, Oldenburg added, but innovators will see this as an opportunity. Appropriate regulation is going to help projects advance and onboard more users.

“There’s going to come a point where you can’t continue building and breaking stuff like this,” Chris Aruliah, chief product officer at BCB Group, said. 

Regulators have expressed concern about the growing stablecoin sector long before last week’s events, Aruilah said. In the President’s Working Group on Financial Markets’ stablecoin report, three major risks associated with the markets were highlighted: risk of depegging, risks of contagion for the broader market, and risks to the payments system.

Terra’s meltdown — as regulators have pointed out — proved that these risks are no longer hypothetical. Moving forward with tangible policy, however, is going to be challenging, Raybeck said. 

“If we’re saying the reserves should be more transparent, that’s not a bad thing,” Raybeck said. “But if the regulations are going to make it so difficult [to operate in the space] and prevent innovation, that’s a real concern.” 

It’s not just stablecoins that regulators are eyeing, Oldenburg added. The entire cryptocurrency industry can expect some sort of policy in the near future, but different countries and regulatory bodies are taking different approaches, and the nature of the industry adds an additional layer of complexity. 

“We’re seeing the convergence here of the technology sector and finance,” Oldenburg said. “Technology does not have this many regulations historically — it’s the financial sector that does — so that makes it very complicated.”

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