The UK government tries to limit the risks of stablecoins

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The UK government wants to address the risks of, among other things, stablecoins. Not surprising given the chaos caused by the Terra stablecoin (UST). A document issued by the UK Treasury Department states that existing “regulatory regimes” can be applied to unregulated digital payment instruments. Managing risks In the new document, published on Tuesday, the ministry proposes to use existing regulatory regimes to mitigate the risks posed by stablecoins and other cryptocurrencies. The document begins on a positive note. Namely, reiterating the UK government’s commitment to crypto innovation. In addition, it is also highlighted that stablecoins must be recognized by law. Although the collapse of UST probably played an important role in the creation of this document, it is nowhere mentioned. Terra and LUNA are also omitted from this plane. The ministry speaks in the document of “managing the risks associated with the failure of a stablecoin company of systemic importance”. A situation very similar to that of UST. “Events in the crypto markets have further highlighted the need for adequate regulation to help mitigate risks for consumers , market integrity and financial stability “. What are these so-called” regulatory regimes “? The set of these rules is known in the UK as the Special Administration Regime (SAR). This SAR would provide the Bank of England with regulatory control over the entities that issue stablecoins. If so, you can check if the system of these stablecoins is watertight. This SAR also ensures that companies always operate in the best interest of their customers (and the rest of the population). The document outlines two different SARs that can be applied to stablecoins, but a final decision will be made. taken later. The dossier asks for a reply, expiring on 2 August. There is already a preference: the Infrastructure Special Administration Regime (RAS FMI). Risks arising from the bankruptcy of this type of company should be addressed.

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