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In addition to the UK government’s plans on stablecoin regulation, the Authority would adapt existing laws on electronic money.
The UK Department of Treasury is reportedly pushing for the regulation of stablecoins across Britain. While this move may be a good development for the crypto community, it also follows the recent crash of one of the top algorithmic stablecoin, TerraUSD. The Treasury Department said its consideration for stablecoins regulation in the UK is for payment purposes only. According to the watchdog, there is no plan for algorithmic stablecoins due to their lack of stability. As such, the government would only consider stablecoins that are pegged to a fiat currency.
Treasury Department to Push for Stablecoins Regulation in UK
The announcement of the regulation for stablecoins in the UK tallies with the fiscal themes of the queen’s speech delivered by Prince Charles.
A spokesperson of the UK Treasury Department commented on the stablecoins regulation. The representative said:
“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. This will create the conditions for issues 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 reliability and safely. The Government has been clear that certain stablecoins are not suitable for payment purposes as they share characteristics with unbacked crypto assets. We will continue to monitor the wider crypto asset market and stand ready to take further regulatory action if acquired.”
The unrecoverable fall of Tera and Luna has no effect on the UK Treasury. Even with the ongoings, the Treasury maintains its focus on ensuring the “UK financial services industry is always at the forefront of technology and innovation.”
Furthermore, the Treasury aims to open doors of opportunities and growth by legalizing stablecoins in the UK market. The plans also include ensuring financial stability as it initiates new financial technologies.
UK Government Plans to Adopt Existing Laws for New Regulation
In addition to the UK government’s plans on stablecoin regulation, the Authority would adapt existing laws on electronic money. The existing rules will help with bringing stablecoins under the management of the Financial Conduct Authority (FCA).
The FCA has been watchful about crypto and its risks right from time. As part of taking cautions, the Authority only permitted a few crypto operators to establish their businesses in the UK.
At press time, Tether is trading at $0.9989, with a 7.55% jump in its 24-hour trading volume. On the other hand, Luna has lost over 28% in the last 24 hours to trade at $0.0002204.
The speech also mentioned the crisis affecting the cost of living of many Brits. Inflation has surged as high as 10% in addition to high energy prices.