The Treasury has reaffirmed its commitment to introducing legislation that encourages the use of stablecoins as an accepted payment method in the UK amid the collapse of the cryptocurrency market, which has removed TerrasUSD’s “stablecoin” and Luna’s token bindings from major exchanges.
In April, the department released a plan to support the use of certain cryptocurrencies as a fully regulated currency as part of the Chancellor’s broader plan to create “global cryptocurrency center»In the UK.
Since the announcement the crypto-market has seen dramatic fallwhich called into question the government plan of stablecoins.
Notably, last week several stablecoins – cryptocurrencies whose value is pegged to something else, often fiat currency – fell significantly in value.
While cryptocurrency values tend to be volatile, stablecoins were previously considered a much safer and more reliable digital asset, so they were part of the Treasury’s cryptocurrency plan.
On May 7, Terra UST, which should be pegged 1: 1 to the US dollar, fell to about $ 0.98. This fall led to a further fall of “algorithmic stablecoin” and failed to recover. The linked Terra Luna token, which at one point last month was valued at $ 118 (£ 96), fell to $ 0.09 last week.
Another stablecoin, Tether, also broke the peg to the dollar last week.
Treasury: “Some stablecoins are not suitable”
Despite the recent collapse of popular stablecoins, the Finance Ministry said UKTN he still plans to continue his plans to cover the crypt, but recognizes that a lot of work will need to be done to get it right.
“It was clear to the government that some stablecoins are not suitable for payment purposes because they have common characteristics with cryptocurrencies without support,” said a Finance Ministry spokesman. UKTN.
“We will continue to monitor the broad cryptocurrency market and are ready to take further regulatory action if needed.
“This will create conditions for issuers and service providers to work and grow in the UK, while ensuring financial stability and high regulatory standards so that these new technologies can be used safely and securely.”
The Treasury also reaffirmed that “legislation to regulate stablecoins” would be part of the Financial Services and Markets Bill, which was announced in speech of the Queen».