Despite the Terra debacle, the UK to recognise stablecoins as legal tender
We only seek to legalize fully backed stablecoins says the Treasury
As the crypto world gears up to deal with the consequences of the death spiral suffered by the Terra ecosystem last week, the United Kingdom’s Department of Treasury announced that its plans to regulate stablecoins as a legal tender continue to stay in place.
The announcement has reinstated Her Majesty’s Treasury’s commitment to supporting innovation in the country.
The department has confirmed that the legalisation of stablecoins as a payment mechanism was part of the financial legislation section of the Queen’s speech. Prince Charles explained that the nation was undertaking various legislations across the board to improve living standards and promote growth.
The Economic Crime and Corporate Transparency Bill will play an important role in achieving these goals as they strengthen the power of law enforcement officers to tackle illicit finance and reduce economic crime, which will facilitate business growth, the Prince of Wales said.
While the UK’s Economic and Finance Ministry department confirmed last month that its constitution would be amended to make way for the use of stablecoins, scepticism regarding the future of such legislation grew as the markets crashed last week following the downfall of LUNA and UST due to the crash witnessed by Terra, one of the most popular stablecoins.
The Treasury’s Chancellor, Rishi Sunak, hinted that the events of last week did not impact the country’s plans, adding that the government will take all steps to ensure the UK financial services industry is always at the forefront of technology and innovation.
A Treasury spokesperson further pointed out that the UK will not legalize payments via “algorithmic stablecoins” like Terra but instead supports 1:1 fully-backed stable coins like USDT or USDC:
“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.”
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