UST Crash Won’t Stop the Industry, Says Morgan Stanley Exec
Algorithmic stablecoins are especially complex, and UST’s crash likely influenced institutional players to take a closer look at the technology behind the tokens
From left to right, Tyrone Lobban, Amy Oldenburg, Sami Start | Photo by Lauren Sopourn
key takeaways
- TerraUSD’s meltdown is not going to stop the industry in the long run, Morgan Stanley Investment Management’s head of emerging markets equity said
- Regulating crypto is inherently difficult given the intersection of technology and finance
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.”
Get the news in your inbox. Explore Blockworks newsletters:
- Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
- Empire: Start your day with top crypto insights from David Canellis and Katherine Ross.
- Forward Guidance: Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin.
- 0xResearch: Get alpha directly in your inbox — market highlights, charts, degen trade ideas, governance updates, and more.
- Lightspeed: All things Solana, in your inbox, every day from Jack Kubinec and Jeff Albus.
- The Drop: The newsletter for crypto collectors and traders, covering games, tokens, apps, memes and more.
