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UK government investigating stablecoin safeguards

Following the recent collapse of TerraUSD and the question as to the stability of other stablecoins, the UK government has announced plans to create a strategy to reduce risks for those who have chosen to invest in these coins.

This strategy has been laid out in a consultation paper recently published by the government. The proposal is now open for feedback, with a deadline coming in early August.
The trigger for this investigation was the collapse of the stablecoin TerraUSD. Though it was supposed to be pegged to the US Dollar, it fell below the value of $1.

This caused a lot of panics throughout the crypto industry and beyond. The UK government might prove to be the first to introduce safeguards for this type of coin.

In its proposal, the Treasury said, “Since the initial commitment to regulate certain types of stablecoins, events in crypto-asset markets have further highlighted the need for appropriate regulation to help mitigate consumer, market integrity, and financial stability risks.”

Others are also considering what to do about stablecoins, with the European Commission even considering banning them. There will be plenty to discuss in the future, and many regulators and governments will no doubt submit their proposals for the issue of stablecoins and the safeguards that could be put in place around them.
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