UK on track to legalize stablecoins after Terra collapse - BiticaNews


The UK Treasury Department has decided to continue regulating stablecoins as legal tender. This decision was met by the crypto community with mixed feelings. This is mainly due to the recent drop of one of the most popular algorithmic stablecoins, TerraUSD (UST).

A local report by The Telegraph highlighted the Treasury’s intention to regulate stablecoins across Britain. This was revealed during the Queen's speech. During the speech, Prince Charles announced the introduction of new legislation in several sectors, including measures to stimulate economic growth to improve living standards in the region. He added:

“A bill (Economic Crime and Business Transparency) will be introduced to further strengthen the powers to fight illegal financing, reduce economic crime and help businesses grow.”

Treasury wants to regulate stablecoins with 1:1 support
Recently, the entire Terra ecosystem has crashed, with LUNA and UST breaking down and likely beyond repair. This is expected to raise some red flags with regulators. Still, the Treasury remains on track to ensure that the UK financial services sector is always at the forefront of technology and innovation. The latter was mentioned earlier by Chancellor Rishi Sunak.

However, the Treasury plan does not legalize algorithmic stablecoins. It prefers fully supported 1:1 stablecoins such as Tether (USDT) or USD Coin (USDC). The Treasury spokesman said the following:

“Legislation to regulate stablecoins used as a means of payment will form part of the Financial Services and Markets Bill announced in the Queen’s speech.”

The Treasury aims to create growth opportunities by ensuring financial stability by introducing new financial technologies. Therefore, it sees 1:1 stablecoins as the perfect option to contribute to this. However, TerraUSD’s value was pegged to another cryptocurrency, which the spokesperson said as follows:

“The government has made it clear that certain stablecoins are not suitable for payment purposes as they share characteristics with unbacked cryptocurrencies.”

The SEC is behind the UK Treasury
United States Securities and Exchange Commission (SEC) Commissioner Hester Peirce recently emphasized the need to have room to fail while supporting a regulatory framework for stablecoins. Peirce said on Twitter:

"I would be happy to talk about how to achieve the SEC's regulatory goals without impeding the trial and error that is so essential to innovation."

Peirce also addressed interest in stablecoins among regulators in a speech to an online panel. She urged the SEC to make exceptions for certain technologies, which would allow her to conduct the necessary experiments. She said at the time:

“We have to leave room for failure because of course that's part of trying new things and our structure really allows for that kind of trial and error. I hope we use it for that.”

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