The British Treasury has declared about regulating the stablecoins after experiencing the collapse of TerraUSD(UST) and terra (LUNA). The HM Treasury, UK Treasury Department by acting on this has planned to regulate the stablecoin payment despite the crypto market meltdown, reported on Saturday, last week.
The declaration followed the collapse of Terra, an algorithmic stablecoin terraUSD (UST) losing its peg to the U.S dollar and terra (LUNA) falling near zero. An HM Treasury spokesman said:
“Legislation to regulate stablecoin, which was used as a means of payment, will be part of the Financial Services and Markets Bill which was announced in the Queen’s Speech.”
He further added to the above that:
” This will create the conditions for issuers and service providers to operate and grow in the UK, whilst ensuring financial stability and high regulatory standards so that these new technologies can be used reliably and safely.”
The Queen’s Speech delivered by Prince Charles outlined the legislative agenda of the British government for the future parliamentary years including two Bills on crypto-assets particularly.
Further, the UK government had disclosed its plan last month to make the country a global crypto hub and “a hospitable place for crypto”, including the dynamic regulatory frameworks establishment for crypto, regulating stablecoins, and also working with the Royal Mint to create a non-fungible token (NFT), going to be issued by summer.
This plan will help to ensure the financial services industry of the UK which is at the forefront of technology and innovation, says Rishi Sunak, the British Chancellor of the exchequer. But, the UK treasury is not willing to include algorithmic stablecoins such as Terra USD (UST) in their legislation, as they do not provide the stability.
Detailing about this the HM Treasury spokesperson said that:
“The government has been clear that certain stablecoins are not suitable for payment purposes as they share characteristics with unbacked crypto-assets.”
Adding to this the Spokesperson said that :
“we will continue to monitor the wider crypto asset market and stand ready to take further regulatory action if required.”
Following these events, the U.S government had also called for immediate regulations of stablecoins the previous week, in action to the fall of Terra. However, Treasury Secretary Jennet Yellen believes that stablecoins are actually not a threat to U.S financial stability.