in a regulated market all you would simply have are some codified fiduciary duties and standardized disclosures
Terra Luna and TerraUSD's algorithmic operations were all disclosed publicly and scrutinized in the open sphere
Do Kwon stated publicly why he was buying the bitcoin - to repurchase Terra Luna and TerraUSD because its shitty broken product that might need to be rebought to temporarily help restore its peg - and Do Kwon has stated publicly now why the bitcoin sold - to repurchase Terra Luna and TerraUSD because its shitty broken product that might need to be rebought to temporarily help restore its peg
I think in a regulated market he just walks away just like all investment banks and bankers do
There are plenty of Exchange Traded Notes (ETNs) that obtusely say "this is dogshit and its going to fall to zero during a period of volatility" and then fall to zero during a period of volatility
Thats exactly what Terra Luna and TerraUSD did
all regulation would do is standardize the way the disclosure is done, really the most likely thing that comes from this is a regulator mandated additional sentence in a brokerage firm's 40 page disclaimer that you surely will read after consulting your financial advisor.
I disagree with part of the thrust of this argument. One of the most hidden things in crypto (despite the transparency of the chain), is who owns, controls, buys and sells coins, in particular related parties to the founders. The disclosure in the regulated markets of insider trades and conflicts of interest is much more robust than in crypto. Yes you can see transactions and wallets, but most of the knowledge is speculations and assumptions, rather than disclosure that can be litigated over. Harder for it to be up to the consumer when founders chose what to disclose, and what to obfuscate.
I don't disagree that there are ETNs that work generally as you describe.
