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UK GDPR replacement emerges, Terra collapse causes crypto crash – May 2022 in review

The stability of stablecoins was questioned, while elsewhere the UK government confirmed plans to ditch GDPR.

By Matthew Gooding

In our look back at the stories that were making the headlines in May, we find crypto investors coming to terms with the cost of a major market crash.

The credibility of stablecoins, long described as a responsible older sibling to traditional, highly volatile, cryptocurrencies like Bitcoin, was delivered something of a blow in May when the Terra stablecoin collapsed, leaving investors out of pocket.

Stablecoins are a type of cryptocurrency which have their value attached to the performance of a conventional fiat currency such as the US dollar. Because of this, they usually avoid wild fluctuations in value while still maintaining the privacy and instant payments which cryptocurrencies offer. A ‘reserve’ of fiat currency equivalent to the amount of stablecoin in circulation is supposed to be held by the issuer to offer users an additional level of security.

Lines went down on cryptocurrency value charts everywhere throughout May as the impact of the Terra collapse sank in. (Photo by Hasbi Sahin/Shutterstock)

Terra eschewed this sensible-sounding proposition in favour of an algorithmic system to ensure that the value of its currency remained. When this failed, the value of the currency fell from its usual price of around $1 to 26 cents, and the currency eventually collapsed, taking several other coins offered by the company with it. An arrest warrant was later issued for Terra founder Do Kwon.

The downfall of Terra had wider implications for the market, hitting the value of leading stablecoin Tether, which briefly dipped below its $1 peg, as well as Bitcoin and other tokens. As we were to discover later in the year, this was only the start of the crypto industry’s problems.

UK GDPR replacement emerges

Always on the hunt for (possibly mythical) Brexit dividends, the UK government confirmed plans to reform the nation’s data laws and move away from the European Union’s General Data Protection Regulations (GDPR).

The news came two weeks before the fourth anniversary of GDPR, which has become the global standard for data protection, with fines worth €1.6bn issued for breaches of the regulations.

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As part of the Queen’s Speech, which set out the legislative programme under then prime minister Boris Johnson, it was revealed that “the United Kingdom’s data protection regime will be reformed”.

Though no other details were presented at the time, John Whittingdale, the then minister of state for media and data, told a Tech Monitor event that the government had no plans to “dismantle” UK GDPR completely, but said it wanted to take action to deal with the (again, possibly mythical) scourge of businesses: red tape.

“We continue to agree with the principles that underlie [GDPR], but we believe there are opportunities to deliver that standard of data protection in a less burdensome and obstructive way, which is why we’ve embarked on a programme of reform,” Whittingdale said.

He added: “One of the things we’re keen to address is that people have become quite risk averse because of the complexities of GDPR and the different provisions and they’ve therefore tended to err on the side of caution and not share data.

“We think there’s a lot of scope to clarify how the rules operate and remove some of the more cumbersome aspects.”

Details of the legislation would emerge in the following months and attract considerable controversy.

Clearview AI fined £7.5m, banned from UK

Facial recognition company Clearview AI found itself in hot water with the Information Commissioner’s Office (ICO), being fined £7.5m for collecting and storing images of UK citizens for use in its software. The ICO also issued a banning order to stop the company from obtaining information about UK residents in future, and ordered it to delete all UK-related records from its database.

Clearview AI has established a database of information on 20 billion people by gathering photographs and other personal information which is publicly available on the internet. It then enables users of its software to input a photograph to see if it matches anyone on the database, and its software has been used by private companies and law enforcement agencies.

However, it does not seek permission to use the images, and though the company no longer operates in the UK, it still attracted the ire of new Information Commissioner John Edwards. “Clearview AI has collected multiple images of people all over the world, including in the UK, from a variety of websites and social media platforms, creating a database with more than 20 billion images,” Edwards said. “The company not only enables identification of those people, but effectively monitors their behaviour and offers it as a commercial service. That is unacceptable.”

Hoan Ton-That, chief executive of Clearview AI, said he was “deeply disappointed that the UK Information Commissioner has misinterpreted my technology and intentions,” adding that the company had “acted in the best interests of the UK”.

More from May 2022: The war on end-to-end encryption

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