British treasury department affirms its commitment to regulate stablecoins after the collapse of UST and LUNA

The

Treasury Department

of the

UK Government

announced its decision to move forward towards creating a legislation that would regulate and recognize cryptocurrencies.


The UK government has proposed to enact regulation for stablecoins despite the recent meltdown of leading stablecoins

Terra USD

(UST) and Terra (LUNA).

The Chancellor of the Exchequer and a spokesperson of HM Treasury Rishi Sunak announced to legalize stablecoins after the collapse of these stablecoins, Telegraph reported on May 14.

Her Majesty’s (HM)

Treasury

is the government's economic and finance ministry, maintaining control over public spending, setting the direction of the UK's economic policy.

The move will enable and ensure the following benefits for the financial state of the country:

* It will help develop the conditions for crypto issuers and service providers to operate and grow in the UK in a legalized way.

* It will also ensure financial stability and high regulatory standards.

* High regulatory standards will allow these advanced technologies to be used in a more secure and trustworthy manner.

* The legislation to regulate stablecoins, to be used as a means of payment, will be part of the

Financial Services and Markets Bill

which was announced in the Queen’s speech on May 10.

* Sunak said that the UK Government is aware of the fact that certain stablecoins are not suitable for payment purposes as they share characteristics with unbacked crypto assets.

* The government would continue to monitor the larger crypto asset market and crypto space and take further regulatory action if need arises.

In a report published in April 2022, the UK government gave details about its plans to regulate crypto assets, stablecoins and distributed ledger technology (DLT) in financial markets.

The report that was a result of a study of 12 months proposed that fiat-backed stablecoins have a potential widespread means of payment. The report emphasized that the decision to regulate stablecoins is in sync with the government’s strong commitment to place the UK’s financial services sector at the forefront of crypto asset technology and innovation.

The legislation will help to deliver a world-leading regulatory regime for stablecoins.


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