On Tuesday, May 24, financial regulators held an emergency meeting in the South Korean National Assembly about the potential impact of Terra’s collapse. This is reported by local media citing department statements.

Representatives of the Financial Supervisory Service (FSS), Fair Trade Commission (FTC) and Financial Services Commission (FSC) attended the hearing.

According to Yonhap News Agency, the FSC Financial Intelligence Unit described the event as a “hurricane of death” when the Terra team allowed the supply of the LUNA cryptocurrency to go wild in an attempt to stabilize the UST price.

According to the researchers, before the collapse of the project ecosystem in South Korea, LUNA owners were about 100,000 people. 10 days after the UST lost par against the US dollar, their numbers rose to 180,000.

The FSC is considering creating a regulatory framework to regulate stablecoins and the DeFi industry.

“Because of the features of virtual assets such as decentralization and anonymity, as well as their cross-border nature, it is necessary to ensure consistency with global norms and strengthen the cooperative system to ensure effective regulation,” the department said.

According to Money Today, at the meeting, FSS senior vice president Li Changwoo said that the agency plans to inspect companies that provide Terra-related financial services.

He described the possibility of the crisis affecting traditional markets as “unlikely”. However, the department will take measures to reduce the risks.

The FSS will also convene a research group that will focus on analyzing the risks associated with cryptocurrencies. The aim is to classify digital assets according to their degree of reliability.

In turn, the FTC plans to check the compliance of Bitcoin exchanges with the Commission’s recommendations regarding user agreements, Yonhap News Agency reported.

In 2021, the regulator told 16 local companies, including Bithumb and Dunamu, to make amends to the standard contracts as it deemed them “unfavorable for customers.”

Recall that earlier the media reported that an interdepartmental group of prosecutors and financial regulators in South Korea will investigate the collapse of Terra.