UK Treasury Department Remains Steadfast on Stablecoins Regulation Plans Despite Market Crash

Recent reports show that the Treasury Department of the UK, HM Treasury, will see through its plans to regulate payment Stablecoins undeterred by the recent market crash.

The revelation came after Terra suffered a breakdown, which triggered a death spiral for its algorithmic Stablecoin UST and its native token LUNA. At press time, UST trades at $0.08 after losing its $1 peg, while LUNA trades at $0.00020.

Commenting on Stablecoin regulation last week, a spokesman of the HM Treasury noted: “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.” He added:

“This will create the conditions for issuers and service providers to operate and grow in the UK, whilst ensuring financial stability and high regulatory standards so that these new technologies can be used reliably and safely.”

Prince Charles gave the “Queen’s Speech” last week, detailing the government’s legislative agenda for the next parliamentary year. Two bills on the agenda directly mentioned crypto assets.

UK Treasury Department to Sidestep TerraUSD (UST) in Regulatory Plans

The United Kingdom revealed plans in April to turn the nation into a global cryptocurrency hub and staple name. The UK announced in the plan that it would establish a broad regulatory framework for cryptocurrency, Stablecoin regulation, and a collaboration with the Royal Mint to create non-fungible tokens (NFTs).

The British Chancellor of the Exchequer, Rishi, Sunak, asserted that the recently announced plan will “ensure the UK financial services industry is always at the forefront of technology and innovation”

However, the Treasury clarified that it would not include algorithmic Stablecoins like the embattled TerraUSD (UST) in the plan. The Department noted that such assets do not guarantee stability. The HM Treasury spokesman noted: “The government has been clear that certain stablecoins are not suitable for payment purposes as they share characteristics with unbacked crypto-assets.” He concluded: “We will continue to monitor the wider crypto asset market and stand ready to take further regulatory action if required.”