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UK’s Department of Treasury Decides To Go With Regulating Stablecoins As Legal Tender



Reports said that the United Kingdom’s Department of Treasury (Her Majesty's Treasury) has reportedly decided to go ahead with legalizing stablecoins as a form of payment. While welcomed by the crypto community, the decision comes as a shocker due to its proximity to the recent fall of the popular algorithmic stablecoin, TerraUSD (UST).


It has been reported that the Treasury’s intent to regulate stablecoins across Britain, was revealed during the Queen’s Speech. During the speech, Prince Charles announced the introduction of new legislation across various sectors, including measures to drive economic growth to improve living standards in the region.


Charles said:

“A bill will be brought forward to further strengthen powers to tackle illicit finance, reduce economic crime and help businesses grow [Economic Crime and Corporate Transparency Bill].”

While the recent crash of the Terra ecosystem, which saw an unrecoverable downfall of LUNA and UST, was expected to raise red flags among the regulators, the UK Treasury maintains its course “to ensure the UK financial services industry is always at the forefront of technology and innovation,” as previously stated by the Chancellor, Rishi Sunak.

However, the Treasury’s plan does not involve legalizing algorithmic stablecoins and instead prefers 1:1 fully-backed stablecoins like Tether (USDT) or USD Coin (USDC).


A spokesman for Treasury said:

“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.”

The report said that by legalizing stablecoins for the UK market, the Treasury aims to open up growth opportunities while ensuring financial stability as it introduces new financial technologies.


Thus, the spokesperson stated:

“The Government has been clear that certain stablecoins are not suitable for payment purposes as they share characteristics with unbacked crypto assets.”

Source: Cointelegraph


 

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