Terra could leave a regulatory legacy similar to Facebook's Libra

The algorithmic stablecoin ban has sparked a series of arguments in the crypto industry, as it is considered a moment decisive.

A new stablecoin bill in the US House of Representatives has proposed imposing a two-year ban on new algorithmically pegged stablecoins like TerraUSD (UST).

The proposed legislation would require the Treasury Department to conduct a study of stablecoins similar to the UST in conjunction with the United States Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Securities and Exchange commission.

An algorithmic stablecoin is a digital asset whose value is kept stable by an algorithm. While an algorithmic stablecoin is tied to the value of a real-world asset, it is not backed by one.

The stablecoin bill has been in the works for several months now and has been delayed numerous times. Treasury Secretary Janet Yellen repeatedly cited Terra's collapse when she called for more regulation of the crypto space.

The failure of the Terra ecosystem that began with the depegging of its UST algorithmic stablecoin ultimately wiped out the $40 billion ecosystem. This led to a crypto contagion that saw the crypto market lose nearly $1 trillion in market value within weeks.

Markets have yet to recover from the contagion, and the collapse of Terra has definitely cast a shadow over the future of algorithmic stablecoins and has become a hot topic for critics, including some policymakers who argue against it. have used to advocate for stricter policies for cryptocurrencies. The latest draft proposal to temporarily ban these stablecoins is an example of this. According to the current version of the bill, it would be illegal to issue or create new "endogenously backed stablecoins".

The draft proposal drew mixed emotions from Crypto Twitter. While some market observers