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.”
HM Treasury, the UK Treasury Department, is forging a way forward with plans to regulate payment stablecoins, despite a crypto market fall last week, according to The Telegraph on Saturday.
Terra’s downfall, which saw algorithmic stablecoin TerraUSD(UST) lose its peg to the US dollar and terra (LUNA) plummet to almost zero, provided confirmation.
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.”
The Queen’s Speech, which defined the British government’s legislative priorities for the coming parliamentary year, was delivered by Prince Charles last week. Two of the proposed measures mention cryptocurrency specifically.
The British government published a detailed strategy in April to transform the country into a global crypto powerhouse and a crypto-friendly environment. The idea includes creating a dynamic regulatory framework for crypto, regulating stablecoins, and cooperating with the Royal Mint to create a non-fungible token (NFT) that will be launched by summer.
According to Rishi Sunak, the British chancellor of the exchequer, the policy will keep the UK financial services industry at the cutting edge of technology and innovation.
According to the Treasury, algorithmic stablecoins will not be included in the bill since they do not guarantee stability. The UST of Terra (LUNA) is 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.