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UK’s exchequer has just affirmed its vow to regulate stablecoins to create a healthy environment for stablecoin issuers and service providers, given the recent TerraUSD (UST) and Terra (LUNA) market crash.
While the digital asset industry is still in a state of panic and uncertainty, some government agencies have been quick to show their support for cryptocurrencies.
The British Treasury Ministry is one such institution. In a new report, a spokesman from Her Majesty’s Treasury issued a statement saying:
“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.”
The UK Bullish is in Crypto?
It represents a positive position for the crypto industry as it is planned to create "financial stability and high regulatory standards so that these new technologies can be used reliably and safely," added the spokesman.
In the Queen’s Speech delivered about a week ago by Prince Charles, crypto-assets were explicitly mentioned in two of the bills put forward with the UK’s top budgetary official and chancellor of the exchequer, Rishi Sunak, saying:
“Plans are underway to ensure the UK’s financial service industry is always at the forefront of technology and innovation.”
Based on a detailed plan released by the uk government, plans to make the uk a 'welcoming place for cryptography' include establishing a dynamic and forward-looking regulatory regime for cryptoassets and related businesses.
The British government is even looking to work with the Royal Mint to create an NFT to be distributed by summer in a move that is a digital extension of the Royal Mint’s commemorative coin program.
This would make the UK one of the first countries to get hit by a public institution.
No more control over Stablecoins.
As far as stablecoin regulation is concerned, the recent collapse of terra UST and terra LUNA markets has put stablecoines under review, with many industry stakeholders calling for stricter regulation.
In light of this, the U.K. Treasury Department's commitment to regulating stabilizers is a step in the right direction to create much needed certainty for the industry.
While the UK has shown a bullish position on crypto and nfts, hm cash does not recognize algorithmic stability because they do not guarantee stability. Terra ust is an algorithmic stablecoin which is supported by no physical assets.
The stablecoin maintains a stable value through a series of algorithms that adjust supply and demand. However, the recent market collapse has brought into question the stability of algorithmic stabilizers.
As added by the HM Treasury spokesman,
“The government has been clear that certain stablecoins are not suitable for payment purposes as they share characteristics with unbacked crypto-assets”
It is not yet clear how the United Kingdom will approach the regulation of stabilizers. Again, this commitment from the Treasury Department is a positive sign for industry that the British government continues to monitor the broader crypto asset market.
What the other jurisdictions provide for stablecoins.
Apart from the United Kingdom, other countries, such as the United States, China and Japan, have also taken steps to regulate stabilisers.
The United States, in particular, has seen its US Treasury Secretary (Janet Yellen) urge Congress to approve federal regulation on stablecoins.
In China, the government banned financial institutions and payment companies from providing crypto-related services even as the People’s Bank of China issued a whitepaper on its e-CNY (digital yuan) project.
