Learn Crypto
Market Research
Market Analysis
Market Notes
Ratings Guide
Join Community
Help
The U.K government wants to address the risks associated with stablecoins in response to the recent collapse of TerraUSD (UST).
U.K. Government proposes stablecoin regulations
The United Kingdom government has released a consultation paper that looks into methods to reduce the financial stability risks linked to stablecoins. The proposed regulations follow the collapse of UST, previously the third-largest stablecoin, earlier this month.
While it appears that the United Kingdom is concerned, the report does underpin the government’s support for cryptocurrency innovation and its goal to recognize crypto stablecoins as a method of payment formally.
“Since the initial commitment to regulate certain types of stablecoins, events in crypto-asset markets have further highlighted the need for appropriate regulation to help mitigate consumer, market integrity, and financial stability risks,” the Treasury stated in its proposal Parliament will consider.
The government suggests changing current legislation to allow the Bank of England the authority to appoint administrators to monitor bankruptcy procedures with failing stablecoin issuers in the consultation paper. The Bank of England would ensure the robustness of its payment infrastructure systems. And also guarantee that businesses make decisions that benefit their consumers and the British people.
A response to Terra’s collapse?
While it’s unclear how direct the paper is a response to the collapse of UST, it does look like the paper references it as the U.K. government states: “events in crypto-asset markets have further emphasized the need for proper regulation regarding stablecoins.
Though the UST collapse was undoubtedly a motivator for the U.K. government to act on stablecoins, the document did not further specify whether it would impact the severity of its regulatory policies. Notably, the term “algorithmic stablecoins” is not used once in the report, implying that the government has not differentiated between dollar-backed stablecoins and algorithmic ones like UST.
Post a Comment