Crypto News on May 12: Terra Tries a Restore Solution, Tether Plunges and Altcoins Capitulate

Terra announced its plan to rescue UST peg — in the event of a crypto markets crash, especially in altcoins layer ones.

The Terra Foundation released a thread with a plan to rescue its plummeting stablecoin and Tether had to fend off a market panic to remain pegged to the dollar. However, authorities said holders could cash out tax-free after a year in Germany.

Terra Struggles to Recover UST Peg 

As LUNA continues to plummet in value, the Terra Foundation passed a governance proposal to restore the TerraUSD peg. It commits to burning more than 370 million UST and staking 240 million LUNA to defend the network from governance attacks and stop the outflow of liquidity from UST. Analysts on Crypto Twitter doubt the feasibility of the plan and remain convinced that LUNA and UST will most probably fail.

Tether Briefly Loses Its Peg Amid Market Panic But Recovers

Another stablecoin faced a brief wobble during morning trading hours. USDT briefly traded at $0.95, a significant 5% discount on the generally reliable stablecoin. As markets continue to be unusually jumpy following the LUNA and UST collapse, traders rushed for the exits to swap their USDT for other stablecoins. USDT has recovered since its dip but continues to trade below its peg.

Altcoins Continue Capitulation — Layer Ones Down Over 75% 

The altcoin sell-off continues as markets plunged further. Many altcoins are now down between 70% and 90% from their all-time highs, with some suffering losses of over 50% in the last seven days. CoinMarketCap covers some of the worst altcoin sell-offs and recaps what market analysts think about the short-term outlook for crypto.

Crypto Holdings to Remain Tax-Free After 1 Year in Germany

The German ministry of finance clarified the state of crypto taxation in the country and will keep crypto tax-free after one year of holding it. That goes even for crypto income derived from staking or lending and maintains Germany’s status as one of the most tax-friendly jurisdictions for cryptocurrencies. The ministry said a further statement with clarifications is already in the works.

Coinbase Denied the Risk of Bankruptcy

Coinbase CEO Brian Armstrong responded to speculation that Coinbase could hold customers accountable in the event of bankruptcy. He said that Coinbase is not in danger of bankruptcy and that customer funds are as safe as ever. Despite the fact that Coinbase stock is down more than 75% from its all-time highs, Armstrong maintains a bullish sentiment.