Ken Griffin, the CEO of American hedge fund and financial services company, Citadel Capital, believes that the Terra (LUNA) tragedy should be recognized as a wake-up call for regulators around the world.
A wake-up call
During an interview with Bloomberg Markets and Finance, Griffin burst on Terra, calling it a “catastrophe.” Notably, the previous week, LUNA/UST model failed to such an extent that it led to the TerraUSD (UST) depegging and two cryptocurrencies burning into ashes.
Citadel CEO said that the incident should motivate the authorities to bring anecessary and crucial regulatory frameworks for cryptocurrencies. However, he added that the regulatory bodies should prioritize stablecoins regulation in particular. He stated:
“I do think that the Terra catastrophe should be a wake-up call to D.C. to actually focus on thoughtful regulation. And in particular, stablecoin, by virtue of its name, almost demands being appropriately regulated.”
According to the CEO of Citadel Capital, stablecoin issuers should be compelled by law to disclose the reserves underpinning the fiat-pegged crypto assets on a regular basis, just as exchange-traded funds (ETFs) are required to expose the underlying assets regularly.
“Just as we have daily disclosures of the ETF holdings, we should have periodic disclosure of what backs the stablecoins so that people know their money is safe or not.”
Griffin comments on Tether
Griffin stated that there are still concerns about the reserves regarding Tether (USDT), the largest stablecoin by market cap and volume. He believes that documentation of reserves backing stablecoins should be available and verifiable.
Notably, the largest stablecoin, Tether, has never explicitly disclosed its reserves, for which it has been targeted by several regulators. Griffin believes that if someone claims to have a stablecoin with a solid model and a dollar value, they should be able to back it up with custody accounts for transparency and stability.