The United Kingdom treasury has decided to go ahead and regulate stablecoins as a legal tender. As impressive as the plan is, the decision comes at a rather exciting time, just after one of the most popular algorithmic stable coins, TerraUSD, crashed.
Her Majesty Treasury’s decision to regulate stablecoins across Britain was delivered to its citizens at the Queen’s speech. Prince Charles announced an introduction of a bill that would “strengthen powers to tackle illicit finance, reduce economic crime and help businesses grow.”
This is, however, not the first time Britain has spoken on this issue. On the 4th of April, Economic Secretary John Glen announced stablecoins debuting in the UK as a means of payment. He supposed that such a move would place the United Kingdom at the forefront of technology in-service operation and investment.
After the Terra ecosystem crash, the expected behavior would be shyness from the crypto industry among regulators. To our utter surprise, the UK treasury maintained its course.
This is not to say the country is legalizing any algorithmic stable coin. Quite the contrary, only 1:1 fully-backed stable coins like USDC or Tether are supported. This underscores the value of Terra’s UST as being tied to a different cryptocurrency that shares characteristics with unbacked crypto assets.
Encouraged Room for Failure
The United States Securities and Exchange commission’s Hester Pierce also highlighted a need to give room for failure while developing regulatory frameworks around 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.”
In the same spirit, Pierce urged the SEC to offer exemptions to specific technologies that would set a broader platform for necessary implementation.
Perhaps new legislation will drive economic growth and improve living standards, and a reconciling attitude is the first step.
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