UK Affirms Commitment to Regulate Stablecoins Following Terra Meltdown – Following the collapse of terrausd (UST) and terra, the British Treasury Department has reaffirmed its resolve to regulate stablecoins. “This will allow issuers and service providers to operate and flourish in the United Kingdom while maintaining financial stability and high regulatory standards,” an HM Treasury spokeswoman said.
Despite a crypto market meltdown last week, HM Treasury, the UK Treasury Department, is pressing on with plans to regulate payment stablecoins, according to The Telegraph on Saturday.
The confirmation came after Terra’s demise, which saw algorithmic stablecoin terrausd (UST) lose its peg to the US dollar and terra (LUNA) drop to near zero.
A spokesman for the Treasury said:
The Financial Services and Markets Bill, which was announced in the Queen’s Speech, would include legislation to govern stablecoins when they are used as a form of payment.
“This will establish the circumstances for issuers and service providers to operate and expand in the UK while ensuring financial stability and high regulatory standards, allowing these new technologies to be utilized reliably and safely,” the spokesperson continued.
Last week, Prince Charles gave the Queen’s Speech, which outlined the British government’s legislative priorities for the coming parliamentary year. Two of the proposed measures directly reference cryptocurrency.
In April, the British government published a detailed strategy to turn the country into a global crypto hub and “a welcoming environment for crypto.” Creating a dynamic regulatory framework for crypto, regulating stablecoins, and collaborating with the Royal Mint to produce a non-fungible token (NFT) to be issued by summer are all part of the proposal.
The proposal will “guarantee the UK financial services industry is constantly at the forefront of technology and innovation,” according to Rishi Sunak, the British chancellor of the exchequer.
The Treasury, on the other hand, says algorithmic stablecoins will not be included in the legislation since they do not ensure stability. The algorithmic stablecoin Terrausd (UST) is an example.
The representative for HM Treasury went on to say:
“Because they share features with unbacked crypto assets, the government has made it plain that some stablecoins are not acceptable for payment purposes.”
“We will continue to watch the broader crypto asset market and will be prepared to take additional regulatory action if necessary,” the spokesperson added.
Following the fall of Terra, US lawmakers also urged for immediate regulation of stablecoins. Treasury Secretary Janet Yellen, on the other hand, feels that stablecoins pose no immediate threat to financial stability in the United States.