Terra's native token, LUNA, hit an all-time low of $0.00825774 per unit on May 12, 2022. Terrausd (UST), a once-stable currency, has become extremely erratic, with a 24-hour price range of $0.842598 to $0.315279 per coin.

UST, formerly a top ten virtual coin, is now rated 25th among 13,419 coins, while LUNA, once a top ten coin, is now ranked 112th.

After the upgrade, the Terra team stated that a patch to reset the network was ongoing. "Validators are installing a patch to prevent additional delegations," the team said. "They will cooperate to restart the network in a few minutes." The Terra team has previously said that the system was experiencing extreme pressure.

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"The present peg pressure on UST from its current supply overhang is causing significant dilution of LUNA," according to the team. "The main challenge is getting bad debt out of UST circulation quickly enough for the system to recover the health of on-chain spreads." Several steps are being done to help achieve this aim. First, the current Prop 1164 will increase the basic pool size and speed up the UST burn rate, reducing on-chain spreads."

The team noted that the patch release codebase was available and that "delegations will be removed once block production resumes." When two-thirds of the voting power is online, the network should go live. "An update will be supplied as soon as possible."

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SEC Commissioner requests Stablecoin regulation

Peirce, also known as 'Crypto Mom,' believes that stablecoin legislation in the United States may be moving forward shortly. On May 12, the London-based Official Monetary and Financial Institutions Forum (OMFIF) policy think tank conducted an online panel debate.

"One area where we could see some action is around stablecoins," she added, referring to tougher crypto laws. "That's an area that has certainly gained a considerable interest this week," she noted, referring to the crash of the TerraUSD stablecoin.

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According to Reuters, the SEC has the chance to "take digital currencies and the technology platforms where they are exchanged" within its authority.

The wheels of bureaucracy and regulation move slowly in the United States, and no precise method for stablecoin regulation has been outlined. However, in light of this week's UST developments, things may now move more quickly.

Tighter regulations on crypto are unlikely to have positive results since SEC Chain Gary Gensler still views them as securities. Stablecoins and crypto, he says, constitute a danger to money markets and the banking industry and should be subject to the same regulations.

Janet Yellen, the US Treasury Secretary, is also pressing for more strict rules on digital assets. This week, she told a Senate banking committee that the current market upheaval highlighted the need for an "adequate" regulatory structure.

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Hester Peirce has adopted a more constructive perspective, advocating for a "trial and error" approach to stablecoin regulation, stating:

"There are a variety of approaches to addressing stablecoins...

We also need to provide room for failure when it comes to experimenting."