UK Aims To Regulate Stablecoins After Collapse Of TerraUSD
As the cryptocurrency recovers from the TerraUSD massive crash, major countries move toward evolving laws to prevent such future events. The United Kingdom (UK) has come forward to propose Auxillary safeguards to protect the stablecoins from possible loss.
Brutal collapse of UST leads to new regulations
As per a report by Reuters, the UK government has given the indication of covering up the gap in the crypto related regulation. The ministry has mentioned that some uncertain events in the digital assets markets have come out since the inceptive commitment to regulate stablecoin. Such incidence calls for suitable regulation to reduce the consumer and market integrity and financial stability risks.
The ministry added that banks, insurers and established companies should comply with the set of rules. This will ensure their deposit accounts, and policies can be shifted instantly to different services providers they fall. This move will surely avoid the panic among the investors.
The brutal collapse of TerraUSD shocked the crypto world. Terra’s stablecoin used to hold a market capitalization of over $18.64 billion which somehow crashed down to $700 million. However, the South Korean agency has launched multiple investigations to find the possible reason behind this massive fall. The inquiry is also checking the involvement of different crypto exchanges and LUNA’s staff involvement in this.
UK asks to amend rules to avoid crisis
Stablecoin plays an important role in the daily trade of the crypto market. As these are the tokens pegged to the value of the dollar, investors’ users trust them in the different phases of the market. The TerraUSD was the 10th largest cryptocurrency before the collapse.
The UK government’s consultation paper suggests that the slump of systemic digital settlement asset firms could have affected the financial stability of the market. While it has also hindered the consumer’s monetary protection.
The ministry has proposed to modify the “Financial Market Infrastructure Special Administration Regime”. This will provide the Bank of England to secure the continuity of stablecoin payments during any disaster.
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