After the collapse of terra usd and terra (UST), the British Treasury Department has reaffirmed its commitment to regulate stablecoins. A spokesperson for HM Treasury stated that this would create conditions for service providers and issuers to grow and operate in the U.K. while maintaining financial stability and high regulatory standards.
Stablecoin Regulation in the UK
The U.K. Treasury Department, HM Treasury, is moving ahead with plans to regulate stablecoin payments despite the crypto market crash last week, The Telegraph reported Saturday.
After the collapse of Terra, which saw the algorithmic stablecoin terrausd(UST) lose its peg with the U.S. Dollar and terra (LUNA fall to nearly zero), the affirmation was made.
A spokesperson for HM Treasury said:
The Financial Services and Markets Bill, which was made public in the Queen’s Speech, will include legislation to regulate stablecoins when they are used as a method of payment.
The spokesperson stated that this would create conditions for service providers and issuers to grow and operate in the UK. However, it will also ensure financial stability and high regulatory standards to ensure these new technologies can safely and reliably be used.
the Queen’s Speech was delivered by Prince Charles last week. It outlined the British government’s legislative agenda in the coming parliamentary year. Two bills specifically address crypto assets.
The U.K. government presenteda detailed plan to make the country a “hospitable place” for crypto. It includes creating a dynamic regulatory framework, regulating stablecoins and working with Royal Mint to create an NFT (non-fungible token) that will be issued by the summer.
Rishi Sunak (British chancellor of exchequer) stated that the plan would “ensure that the UK financial service industry is always in the forefront of technology, innovation, and the latest technology.”
The Treasury says they don’t plan to include algorithmic stability coins in the legislation because they don’t guarantee stability. An example of an algorithmic stabilitycoin is Terrausd (UST).
Further details were provided by the spokesperson for HM Treasury:
Because they have characteristics similar to unbacked crypto assets, the government has made it clear that some stablecoins cannot be used for payment purposes.
The spokesperson stated that they will continue to monitor crypto assets markets and are ready to take additional regulatory action as necessary.
U.S. legislators also demanded urgent regulation of stablecoins following the fall Terra. Janet Yellen, Treasury Secretary, believes that stablecoins do not pose a threat to financial stability in the United States.