The United Kingdom welcomed new stablecoin rules with open arms as the crypto community there is waiting for official guidance. The new bill proposes that stablecoins could get included in the same regulatory rules for fiat payments.
The Parliament will discuss the bill in September, the first time the British government will fully focus on cryptocurrency.
It will need to pass through a legislative procedure wherein crypto advocates await how regulators will plan to interpret and implement the rules.
Terra Influenced the UK Stablecoin Rules
The rules also contribute to UK’s economic strategy after the Brexit campaign. The country desires to expand its financial regulations towards digital assets or “digital settlement assets (DSAs),” coined by the UK Treasury
The proposal reacted to the Terra USD (UST) fallback in May 2022. As a result, UST lost the peg to the fiat US Dollar, which brought down $40 billion.
In the aftermath, Singapore and the US seek to resolve and add more regulations to stablecoin issuers.
The DSA proposal will put focus on systemic stablecoins – which consider stablecoins that have huge scales that can cause financial stability to collapse. Unlike the EU rule, where stablecoin issuers must proclaim that they are operating in Europe, the British bill already assumes that the issuers already exist in the country.
Regulators must investigate each stablecoin issuer in the UK and provide any key takeaways as to whether or not the cryptocurrency is on the brink of bankruptcy or sudden collapse.
In other words, it is not as bad as the crypto community thought. Instead, the crypto advocates welcome this rule with open arms to ensure the Terra Luna disaster never happens again to investors. If cryptocurrency seeks to prove it is not a Ponzi scheme, it will need to adhere to official rules from the government.