By Alicia Maher
The hint by the UK’s treasury department to approve stablecoins as a legal tender has come as a massive shock to many crypto industry watchers, given the recent crash of a stablecoin, Terra’s UST. However, the crypto community regards the development as a positive sign in the country’s greater adoption of digital assets.
The Queen’s Speech
The Popular news outlet, the Telegraph, was the first to break the news after the recent Queen’s speech. While delivering the speech, Prince Charles revealed that the authorities would introduce new policies that cut across all industries.
But the policies aim to improve the standard of living and enhance the growth of the nation’s economy. The Prince further said, “a bill will be introduced to bolster our anti-crime agencies in tackling illegal funds, lessen economic-related frauds and aid growth of SMEs.” The bill would be known as the economic crime and corporate transparency bill.
Earlier last month, a tweet by the UK treasury’s department, which was previously reported in various media, suggested that there would likely be an amendment of the current crypto regulatory policy, which will see the introduction of stablecoins as a means of settling financial transactions.
Economic Secretary @JohnGlenUK announced today that stablecoins will be brought into UK payments regulation.
This places the UK financial services sector at the forefront of technology, creating conditions for stablecoin issuers and service providers to operate and invest. pic.twitter.com/14SsIGW5bf
— HM Treasury (@hmtreasury) April 4, 2022
Despite the recent crash of the terra’s stablecoin (UST) and native token (LUNA), many industry experts had hoped that all financial regulators would be cautious about issuing any stablecoin-related regulation. However, the UK treasury department is issuing a stablecoin-related policy to “remain at the forefront of technology and innovation, ” as Chancellor Rishi Sunak said a few months ago.
But UK’s treasury department further remarked that only fully-backed stablecoins such as USDT and USDC would be legalized for financial transactions and not algorithmic stablecoins such as the UST.
A representative of the department who spoke on condition of anonymity said, “as disclosed in the queen’s speech, the financial services and markets bill would contain the policy for the regulation of stablecoins for financial settlement transactions.”
The UK treasury department opines that it can introduce new financial technologies (such as the legalization of stablecoins) into UK’s finance sector and enhance growth opportunities without sacrificing financial stability.
When asked whether a stablecoin pegged to a different but stronger digital currency can serve as a financial settlement instrument, the treasury rep, said, “the authorities have provided detailed clarification on the specific stablecoins that can be used for these purposes. These chosen ones are selected because they have common traits with unbacked digital assets.”
Hester Pierce Wants ‘Experimentation’ Before The Inclusion Of Stablecoins Into The Financial Sector
A commissioner of the US SEC, Hester Pierce, has claimed that she is not against having a proper regulation for stablecoins. However, there should be allowable for failure. Pierce made her remarks during a recent virtual event where she spoke about the increasing interest of regulators in stablecoins.
I'd be happy to talk about how to achieve the SEC's regulatory objectives without impeding the trial and error that is so essential to innovation. [email protected]
— Hester Peirce (@HesterPeirce) May 14, 2022
As previously reported, pierce suggested that the sec should exempt specific technologies to make room for necessary experimentation. Pierce added, “since our framework allows experimentation, we must use it while trying to incorporate these new technologies.”