UK Treasury en route to legalizing stablecoins amid Terra’s UST crash

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UK Treasury en route to legalizing stablecoins amid Terra's UST crash

During the Queen’s Speech, Prince Charles announced the introduction of a bill that would help tackle illicit finance, reduce economic crime and help businesses grow.

United Kingdom’s Department of Treasury, or Her Majesty’s Treasury, has reportedly decided to go ahead with regulating stablecoins as legal tender. While welcomed by the crypto community, the decision comes as a shocker due to its proximity to the recent fall of the popular algorithmic stablecoin, TerraUSD (UST).

A local report from The Telegraph highlighted the Treasury’s intent to regulate stablecoins across Britain, which was revealed during the Queen’s Speech. During the speech, Prince Charles announced the introductions of new legislation across various sectors, including measures to drive economic growth to improve living standards in the region, adding:

While the recent crash of the Terra ecosystem — which saw an unrecoverable downfall of LUNA and UST — was expected to raise red flags among the regulators, the U.K. Treasury maintains its course “to ensure the U.K. financial services industry is always at the forefront of technology and innovation,” as previously stated by the Chancellor, Rishi Sunak.

However, the Treasury’s plan does not involve legalizing algorithmic stablecoins and instead prefers 1:1 fully-backed stablecoins like Tether (USDT) or USD Coin (USDC). According to the Treasury spokesman:

While speaking at an online panel, Peirce mentioned the rising interest in stablecoins among regulators. As Cointelegraph reported, Peirce urged the SEC to provide exemptions to particular technologies, whic would allow for necessary experimentation:

“We need to allow room for there to be failure because that obviously is part of trying new things and our framework really does allow for that kind of trial and error. I hope that we will use it for that purpose.”

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