The UK Department of Treasury going ahead with regulating stablecoins as legal tender despite the recent fall of TerraUSD (UST). This was revealed during the Queen’s speech. Prince Charles announced that new legislation will be introduced across various sectors. This includes measures to drive economic growth to boost living standards in the region.
Prince Charles said the Economic Crime and Corporate Transparency Bill will be brought forward to further strengthen powers to tackle illicit finance, reduce economic crime and help businesses grow. Last month, the UK’s Economic and Finance Ministry department amended its existing regulatory framework for incorporating stablecoins as a means of payment. The United Kingdom has placed the financial services sector at the forefront of technology. It has created conditions for stablecoin issuers and service providers to operate and invest.
The recent UST crash was expected to raise red flags among regulators. However, it hasn’t deterred them much. Rishi Sunak, the Chancellor, highlighted that the UK Treasury maintains its course to ensure that the UK financial services industry is always at the forefront of technology and innovation. However, it should be noted that the Treasury’s plan does not involve legalizing algorithmic stablecoins. It prefers 1:1 fully-backed stablecoins like USDC or Tether (USDT).
A Treasury spokesperson said legislation to regulate stablecoins will be part of the Financial Services and Markets Bill. The spokesperson highlighted that the government has been clear that certain stablecoins are not suitable for payment purposes as they share characteristics with unbacked crypto assets.
The Treasury wants to open up growth opportunities whilst ensuring financial stability with new financial technologies.