The U.K. Treasury Department, HM Treasury is moving ahead with its plans to regulate payment stablecoins even after a crypto market breakdown last week.
The collapse of Terra which witnessed algorithmic stablecoin terrausd (UST) losing its peg to the U.S. dollar and terra (LUNA) reaching near zero, preceded the affirmation.
As per an HM Treasury spokesman, legislation for regulating stablecoins, which were used as a means of payment will be a component of the Financial Services and Markets Bill that was announced in the Queen’s Speech.
Further, the spokesperson said that it will devise the conditions for service providers and issuers to operate and grow in the UK, at the same time making sure financial stability and high regulatory standards so that these new technologies can be used safely and reliably.
Last week, Prince Charles delivered the Queen’s Speech, highlighting the legislative agenda of the British government for the next parliamentary year. Two of the bills proposed specifically mention cryptocurrencies.
In April, the government of the U.K revealed a detailed plan to establish the country as a “ global crypto hub” and “a hospitable place for digital assets.”
Drafting a dynamic regulatory framework for crypto, regulating stablecoins, and working with the Royal Mint to develop a non-fungible token (NFT) to be issued by summer, are among its plans.
The British chancellor of the exchequer, Rishi Sunak, has stated that the plan will make sure that the financial services industry of the UK is always leading in terms of technology and innovation.
The Treasury has no intention of including algorithmic stablecoins in the legislation, stating they provide no guarantee of stability. One example of an algorithmic stablecoin is Terrausd (UST).
Further detailing, the HM Treasury spokesperson said:
The government cleared earlier that some stablecoins are not suitable for payment purposes because of their characteristics with unbacked crypto assets.
The spokesperson then adds that they will continue to look after the wider crypto asset market and if required can take regulatory action.
After the fall of LUNA last week, U.S. lawmakers also called for the urgent regulation of stablecoins. But Janet Yellen, Treasury Secretary, is of the opinion that stablecoins are currently not a real threat to U.S. financial stability.
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