Following the collapse of TerraUSD (UST) and Terra (LUNA), the British Treasury Department has reaffirmed its resolve to regulate stablecoins.
According to a Her Majesty’s (HM) Treasury Spokesperson,
“Legislation to regulate stablecoins, where used as a means of payment, will be part of the Financial Services and Markets Bill which was announced in the Queen’s Speech.”
Despite a crypto market crash 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) plummet to near zero.
The HM Treasury Spokesperson further said,
“This will create the conditions for issuers and service providers to operate and grow in the U.K., whilst ensuring financial stability and high regulatory standards.”
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 comprehensive strategy to turn the country into a worldwide crypto powerhouse and a welcoming environment for crypto. Establishing a dynamic regulatory framework for crypto, regulating stablecoins, and collaborating with the Royal Mint to produce a non-fungible token (NFT) to be released by summer are all part of the proposal.
The strategy, according to the British chancellor of the exchequer, Rishi Sunak, will keep the UK financial services industry at the forefront of technology and innovation.
The Treasury, on the other hand, says algorithmic stablecoins will not be included in the law since they do not ensure stability. Terra’s (LUNA) UST is an example of an algorithmic stablecoin.
HM Treasury Spokesperson went on to say,
“The government has been clear that certain stablecoins are not suitable for payment purposes as they share characteristics with unbacked crypto assets.”
Following the demise of Terra (LUNA) and UST, US politicians also urged for immediate regulation of stablecoins. Treasury Secretary Janet Yellen, on the other hand, feels that stablecoins pose no immediate danger to financial stability in the United States.