UK Treasury pushes forward a Stablecoin regulation
Algorithmic stablecoins would be excluded due to their lack of stability; only stablecoins backed by fiat currencies will be considered
By Shashank Bhardwaj
The UK Treasury has announced that it is open to stablecoin regulation for payment purposes. However, algorithmic stablecoins would be excluded due to their lack of stability; only stablecoins backed by fiat currencies will be considered.
This declaration is in accordance with Prince Charles' speech, which highlighted the British government's legislative agenda for the coming year. In the Queen's Speech on Tuesday, May 10, Prince Charles announced that the government would introduce new legislation to strengthen the UK's financial services industry and guarantee that it acts in the interest of all people and communities. Two of the proposed bills specifically mentioned cryptocurrency.
John Glen, the UK's Economic Secretary to the Treasury, had indicated in April 2022 that the country would begin regulating stablecoins. He said, "I can confirm that we will be legislating to bring certain stablecoins into our payments framework… creating the conditions for stablecoin issuers and service providers to operate and grow in the UK."
In April, the British government also published a detailed strategy to turn the country into a global crypto hub and a friendly atmosphere for crypto. The UK government is now looking to alter existing regulations governing electronic money to include stablecoins, bringing stablecoins under the Financial Conduct Authority's scrutiny.
“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,” a spokesperson from the Exchequer said. “The Government has been clear that certain stablecoins are not suitable for payment purposes as they share characteristics with unbacked crypto assets. We will continue to monitor the wider crypto asset market and stand ready to take further regulatory action if required.”
Following the fall of Terra last week, US lawmakers have also urged for the immediate regulation of stablecoins. Treasury Secretary Janet Yellen, however, feels that stablecoins pose no immediate threat to financial stability in the United States.
The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash