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Crypto Meltdown has government officials talking about cryptocurrency politics

  • It was a particularly bad week for the crypto market, with a leading project almost completely collapsing
  • In the Wake of the News, Government Officials Speak About Crypto Regulation
  • President Joe Biden signed an executive order on crypto earlier this year to get the ball rolling

Source: Craig Hastings/

The crypto meltdown appears to be finally coming to an end, with many high-profile projects going green for the first time this week. However, they are not joined by Earth (LUNA USD), whose dramatic crash rocked the market for most of the week. However, the event has political decision-makers talking. More and more government officials are speaking out about crypto regulation. But it seems that these policy makers aren’t just talking about crypto. Many seem to invest in the industry.

Over the past few days, investors have witnessed the spectacular crash of LUNA and TerraUSD (UST-USD) prices. After starting to slide on Saturday, the UST stablecoin almost completely lost its value pegged to $1. Now it is trading at just 15 cents. The crash of the supposedly rock-solid stablecoin has rattled investors. As a result, many have decided to withdraw their funds from the Terra ecosystem. This, in turn, causes LUNA prices to plummet. A crypto top 10 by market capitalization last week, the coin is now essentially worthless. It has fallen to less than a quarter of a cent from its all-time high of $119, which it reached last month.

This news disrupts the discourse on cryptography; many people, both inside and outside the market, are discussing the viability of digital currency. They wonder if a decentralized asset economy is really feasible.

Crypto Meltdown Brings Commentary From All Over The Capital

In the wake of the crypto meltdown, government officials are showing interest in reviving the debate over crypto regulation. Since Terra’s volatility first surfaced on Saturday, we’ve been hearing from not only Congress, but also the Securities and Exchange Commission (SEC) and the US Treasury.

Pennsylvania Senator Pat Toomey is one of the first representatives to tackle crypto since the UST lost its peg at $1. The senator, who serves on the Banking, Budget and Finance Committees, is determined to keep the stablecoin market alive. Specifically, Toomey says stablecoin assets still don’t pose the same risk to financial systems as regulators. He adds that “failure should be an option” for all stablecoins, allowing the market to determine what works and what doesn’t.

SEC Commissioner Hester Peirce appears to support Toomey’s sentiments. Another crypto bull in government, Peirce reiterates that regulations must leave room for projects to fail, saying it’s “part of trying new things.”

Meanwhile, Treasury Secretary Janet Yellen also spoke earlier this week about the regulations. Yellen’s view is that government should foster “responsible innovation”, not be so strict that it kills innovation, but rather put in place safety nets to protect investors.

These comments all come as lawmakers themselves appear to be embracing crypto for personal gain. Last year, only eight members of Congress owned or traded cryptocurrencies. This year, that number nearly tripled, with 21 members of Congress or their immediate family trading crypto assets. This revelation agitates the nerves of some analysts; Legal expert Richard Painter said the exposure could “undermine public confidence in the crypto market.”

As of the date of publication, Brenden Rearick had no position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to publishing guidelines.


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