20 May 2025

Legislators Mull Their Crypto Winter Response

As the market continues to struggle, with Bitcoin trading below $30,000 press-time and most of the altcoins showing a subpar performance, the response of different actors varies.

While Charles Hoskinson, the founder of Cardano and co-founder of Ethereum, has noted that the current bear market is nothing different from the previous ones comparing it to a “cold ice bath” saying “we are in the panicked blood in the street phase”, others are not as convinced that the future looks glossy.

Legislators in both the U.S. and Europe are once again eyeing rules that regulate and supervise stablecoins, many of which are pegged to the US Dollar.

In the focus is TerraUSD (UST) and its sister governance token Luna that crashed in the past week. Claiming to be “algorithmic” and relying on financial engineering to keep the link to the greenback, its price fell from $1 to $0.09498, with Coinmarketcap reporting that “The Terra blockchain has officially halted and UST has remained de-pegged from the US dollar since 9th May 2022.”

Meanwhile, Terra Luna effectively lost all of its value and is now trading at $0.0001523.

Just a month ago its price was hovering at $119.

The final slump happened after Luna Foundation Guard, the second largest known holder of Bitcoin, liquidated almost its entire reserves last week worth billions in a failed attempt to defend the Terra UST stable coin peg. Of the 80,394 Bitcoin worth $2.4 billion it held as of May 7th just a day before Terra had been unpegged from the USD, only 313 are still available.

The rest were liquidated between May 8th and May 10th, when Bitcoin traded between $31,000 and $35,000, leaving many investors broke. Ethereum co-founder Vitalik Buterin suggested prioritizing helping “smaller wallets,” or people who had “a couple thousand or more of UST deposited in Anchor,” rather than “rich whales.”

The crypto community’s response to the failure was predictably negative, with some users noting “$UST This is what a Market unregulated is, full stop. I lost a lot too but I am glad I realized no more this sh#t. Are u happy now all crypto lovers without any market rules? Well now take this loss and deceive and SHUT the fffff up!”

In this chaos, Tether’s (USDT) price also lowered to 95 cents before bouncing back.

Because of this volatility and huge losses among the regular investors, BTC critics are already speculating about the measures necessary to address the market vulnerabilities.

Industry leaders fear that well-known crypto skeptics such as Senator Elizabeth Warren and Securities and Exchange Commission Chair Gary Gensler will double down their efforts to cripple the crypto-verse.

Gensler has already expressed his concern about the market, calling out crypto exchanges for offering multiple services that are often in conflict with one another, such as custody, market-making, and trading. He also floats that most cryptocurrencies constitute securities as the administration looks to regulate digital assets.

Meanwhile, in Europe, Czech liberal Ondřej Kovařík of the Renew Europe European Parliament group warned against hasty decisions on how to regulate the market, referencing the EU’s market in crypto assets bill, dubbed Digital finance: Markets in Crypto-assets (MiCA), which could be in place by the end of 2023.

The final text is slated to be reviewed on Wednesday.

Other members of the European Parliament, like Spanish Green Ernest Urtasun, compare the crypto market to the subprime mortgage market, which triggered the 2008 financial meltdown.

We expect a similar sense of urgency that we have seen in recent statements by top [European Central Bank] executives calling for an end of the de-regulated crypto Wild West,

he said.

To remind, the European Central Bank has offered to tax crypto assets, especially if they have a high carbon footprint.

Commenting on TerraUSD’s crash, German conservative Stefan Berger of the European People’s Party, who is less wary of the current crash, has called on the legislators to be wary of kneejerk reactions.

According to him, the slump was a wake-up call, yet this is not “to say that all stablecoins are problematic,” said Berger, adding that “legislators should take a closer look at their design in the future before authorizing them. MiCA is an important step here.”

While the regulators are yet to decide on how to tackle the aftermath of the crypto plunge, others are already feeling bullish about the market. Among them is the well-known bull Michael Saylor who believes that there is an explanation why the collapse of UST and LUNA happened, reiterating his support for Bitcoin, tweeting that

Following the UST/LUNA collapse, @LynAldenContactoffers an excellent primer on the differences between #bitcoin. & #Crypto as well as the risks inherent to tokens that aspire to advanced functionality & performance via PoS and active project management. https://lynalden.com/digital-alchemy/

Even among the cryptocommunity the sentiment continues to be good, with some underscoring that “there is a lot of positive news about $LUNA and $UST, the team takes more action quickly, I still support this project.”

The content on The Coinomist is for informational purposes only and should not be interpreted as financial advice. While we strive to provide accurate and up-to-date information, we do not guarantee the accuracy, completeness, or reliability of any content. Neither we accept liability for any errors or omissions in the information provided or for any financial losses incurred as a result of relying on this information. Actions based on this content are at your own risk. Always do your own research and consult a professional. See our Terms, Privacy Policy, and Disclaimers for more details.

Articles by this author
U.S. DOJ Probes Data Breach at Major Crypto Exchange Coinbase

U.S. DOJ Probes Data Breach at Major Crypto Exchange Coinbase

The U.S. government is analyzing a recent hack of Coinbase crypto exchange that exposed customer data to cybercriminals.

Anton Kryshtal
Vinanz Acquires Bitcoin at $103K Each, Cites Currency Management Strategy

Vinanz Acquires Bitcoin at $103K Each, Cites Currency Management Strategy

UK-based mining firm Vinanz has announced its first strategic Bitcoin purchase of 16.9 BTC for $1.748 million, as it begins shifting toward a Bitcoin-focused treasury model.

Vlad Vovk
Circle May Sell to Coinbase or Ripple as It Pursues $5B IPO

Circle May Sell to Coinbase or Ripple as It Pursues $5B IPO

Circle is reportedly holding informal sale talks with Coinbase and Ripple as it prepares to go public with a valuation of at least $5 billion.

Anahit Avetisyan
Metaplanet Buys 1,004 BTC for $104.3M, Boosting Holdings to 7,800 BTC

Metaplanet Buys 1,004 BTC for $104.3M, Boosting Holdings to 7,800 BTC

Japanese investment firm Metaplanet has increased its official Bitcoin reserve to 7,800 BTC. The company funds the program through bond issuance and aims to hit 10,000 BTC by year-end 2025.

Dmytro Psevdonimenko
Lyn Alden vs the System: A New Philosophy of Money

Lyn Alden vs the System: A New Philosophy of Money

She avoids hype, doesn’t promise miracles, and refuses to trade on fear—yet Wall Street reads her. Who is Lyn Alden, and why are her ideas challenging the foundations of modern finance?

Iaroslava Kramarenko
Sergey Nazarov (Chainlink): The Man Who Wants to Chain the World Together

Sergey Nazarov (Chainlink): The Man Who Wants to Chain the World Together

How Sergey Nazarov built the rails for a global internet of contracts — and why 2025 might be the year it all locks in.

Elina Moskovchuk
Monica Long: How Ripple’s Quiet Force Is Redrawing Crypto’s Map

Monica Long: How Ripple’s Quiet Force Is Redrawing Crypto’s Map

Ripple’s Monica Long isn’t chasing headlines—she’s quietly building crypto’s future. From payments to tokenization, here’s how she’s reshaping finance from the inside.

Elina Moskovchuk
Resistance levels: logic, methods, techniques

Resistance levels: logic, methods, techniques

Resistance levels are places where price struggles to move higher, often stalling or reversing after several attempts. Let’s learn how to find, draw and interact with them when trading.

The Coinomist
What Is Bitcoin Knots, a Fork by Luke Dashjr?

What Is Bitcoin Knots, a Fork by Luke Dashjr?

Bitcoin Knots (formerly Bitcoin LJR) is an alternative to Bitcoin Core, both allowing network participants to interact with the Bitcoin blockchain.

Anahit Avetisyan
How to Buy New Crypto Before Listing: A Step-by-Step Guide

How to Buy New Crypto Before Listing: A Step-by-Step Guide

Buying a cryptocurrency before it’s listed publicly has become one of the most talked-about strategies in the space, offering the potential for major upside—if done carefully.

The Coinomist
The Rise and Fall of Web3 Darlings: A Guide to Crypto Longevity

The Rise and Fall of Web3 Darlings: A Guide to Crypto Longevity

Most Web3 projects don’t collapse—they just stop being talked about. What makes one protocol a star and another a ghost? And why, in crypto, silence might signal transformation rather than failure?

Vlad Vovk
Beyond Profits: Understanding the Spiritual Side of Trading

Beyond Profits: Understanding the Spiritual Side of Trading

Are spiritual habits the missing link in trading psychology? For many, mindfulness and reflection offer a buffer against stress, reduce snap decisions, and aid in staying grounded through market volatility.

Vlad Vovk
How Cryptocurrency and Its Owners Are Tracked

How Cryptocurrency and Its Owners Are Tracked

Think blockchain is private? Wallets have no names and transfers seem untraceable — but that’s misleading. Discover how experts uncover wallet owners and link identities to transactions.

Vlad Vovk
Bitcoin Peaks at $107K Before Slipping Under $105K—Then Whales Pulled the Plug

Bitcoin Peaks at $107K Before Slipping Under $105K—Then Whales Pulled the Plug

The rally didn’t last. Bitcoin tumbled under $105,000 after market manipulation unleashed a cascade of liquidations worth hundreds of millions.

Anton Kryshtal
Bitcoin Retests $101K as Market Consolidation Holds

Bitcoin Retests $101K as Market Consolidation Holds

BTC remains range-bound between $101,000 and $105,000 as the market waits for new catalysts. Despite the pause in momentum, the leading cryptocurrency continues to show underlying strength.

Anton Kryshtal
MORE
Earning by Habit: How Crypto Weaves into Everyday Actions

Earning by Habit: How Crypto Weaves into Everyday Actions

You can now earn crypto tokens for your most routine daily habits — shopping, working out, or grabbing breakfast at a café. But how does it actually work?

Yara Zornell
Valletta: How Blockchain Became a Growth Engine for the Island of the Hospitallers

Valletta: How Blockchain Became a Growth Engine for the Island of the Hospitallers

Malta attracts crypto companies from around the world — flexible regulation, low taxes, and a prestigious European jurisdiction have turned the small city of Valletta into a land of opportunity.

Iaroslava Kramarenko
MORE