Last Updated: 22 July 2022
Will it soon be possible to use USDT or USDC like pounds? In the United Kingdom, a bill is ready to regulate stablecoins as a means of payment. The aim is to match the emerging technology with existing rules for financial services.
The UK Treasury said they want to regulate certain types of stablecoins. The bill — which seeks to make stablecoins a means of payment — aims to phase out the current legislation.
The current legislative framework stems from the EU, but the UK wants to move away from it with this bill. If this proposal passes, the UK could gain a head start in developing a regulated crypto and stablecoin system.
In the EU, we have a similar proposal; the MiCA. This stands for Markets in Crypto Assets and is a set of rules and guidelines for EU member states. Both the MiCA and the most recent UK bill are not intended to fully adopt crypto but rather to protect financial stability.
Stablecoins can pose a threat to this financial stability. Since the collapse of TerraUSD, stablecoins no longer have the positive name they used to carry. “Today is a landmark day for financial services in the UK,” Nadhim Zahawi, chancellor of the UK Treasury, said in the statement.
There will also be so-called ‘Sandboxes’ in the UK for this regulation. For those who know sandbox only through crypto; this stands for a closed virtual space where programs can work without disturbing other processes. A kind of safe place for processes to run as securely as possible.
The Sandbox and the regulatory framework must ensure that new technologies can be safely tested in an environment that does not interfere with the current system. Therefore, this is likely to be kept out of the public domain.