The UK Treasury Department has affirmed its commitment to regulating stablecoins after the collapse of terrausd (UST) and terra (LUNA). “This will create the conditions for issuers and service providers to operate and grow in the UK, while ensuring financial stability and high regulatory standards,” a UK Treasury spokesman said.
Regulation of stablecoins in the UK
HM Treasury, the UK’s treasury department, is moving forward with plans to regulate payout stablecoins despite last week’s crypto market crash, The Telegraph reported on Saturday.
The assertion followed the collapse of Terra which saw the algorithmic stablecoin terrausd (UST) lose its peg to the US dollar and terra (LUNA) fall to near zero.
A UK Treasury spokesperson said:
Legislation to regulate stablecoins, when used as a form of payment, will form part of the Financial Services and Markets Bill announced in the Queen’s Speech.
“This will create the conditions for issuers and service providers to operate and grow in the UK, while ensuring financial stability and high regulatory standards so that these new technologies can be used reliably and securely.” , the spokesperson added.
Prince Charles delivered the Queen’s Speech last week, outlining the UK government’s legislative program for the next parliamentary year. Two of the proposed bills specifically mention crypto assets.
The UK government unveiled a detailed plan in April to make the country a global crypto hub and “a hospitable place for crypto”. The plan includes establishing a dynamic regulatory framework for crypto, regulating stablecoins, and working with the Royal Mint to create a non-fungible token (NFT) to be issued by summer.
Rishi Sunak, Britain’s Chancellor of the Exchequer, said the plan “will ensure that the UK financial services sector is always at the forefront of technology and innovation”.
However, the Treasury does not plan to include algorithmic stablecoins in the legislation, saying they do not guarantee stability. Terrausd (UST) is an example of an algorithmic stablecoin.
Her Majesty’s Treasury spokesperson said:
The government has made it clear that some stablecoins are not suitable for payment purposes because they share characteristics with non-backed crypto assets.
“We will continue to monitor the broader crypto asset market and stand ready to take further regulatory action if necessary,” the spokesperson added.
US lawmakers also called for urgent regulation of stablecoins last week after the fall of Terra. However, Treasury Secretary Janet Yellen believes that stablecoins currently pose no real threat to US financial stability.
What do you think of the UK government’s commitment to regulating stablecoins? Let us know in the comments section below.
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