Some cryptocurrencies have always been fairly volatile, with values soaring or plunging within a short space of time.
So for the more cautious investor, stablecoins were considered the sensible place to go.
As the name implies, they are designed to be a steadier and safer bet.
At the moment though, that stability is proving hard to find.
At the time of writing, this had collapsed to less thanUS$7 billion.
Investors have taken tosocial mediato lament this development.
Some spoke of lost life savings and the devastating impact of the currencys collapse.
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The impact of volatility in the stablecoin arena should not be underestimated and could destabilize the entire sector.
But algorithmic stablecoins like Terrawork differently.
Its value is nowless than US$0.06having been trading at around US$82.00 just seven days earlier.
But they have issues too.
And in recent days Tether too has seen itsvalue fall.
But investors with their funds in Terra have seen their savings drop by around half.
The fact it has still not stabilized does little to alleviate worries.
In simple terms, the potential for a cryptocurrency crisis is very real.
This is why the approach of governments worldwide needs to change.
While plenty has been said about regulationin the UKandthe US, there has been little meaningful action.
The time for allowing the sector freedom to innovate seems to have passed.
But allowing the sector the opportunity to innovate should not come at the expense of peoples savings.
One stablecoin struggling is bad news.
But two or more could be catastrophic for customer confidence.
