{"id":62305,"date":"2022-06-01T11:44:37","date_gmt":"2022-06-01T08:44:37","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=62305"},"modified":"2025-09-05T17:06:36","modified_gmt":"2025-09-05T14:06:36","slug":"uk-proposes-measures-to-guard-against-a-stablecoin-crash","status":"publish","type":"post","link":"https:\/\/u1f987.com\/en\/uk-proposes-measures-to-guard-against-a-stablecoin-crash\/","title":{"rendered":"UK proposes measures to guard against a stablecoin crash"},"content":{"rendered":"<p><span data-descr=\"the government department responsible for the duties of the Treasury\" class=\"old_tooltip\">Her Majesty&#8217;s Treasury<\/span> <a href=\"https:\/\/assets.publishing.service.gov.uk\/government\/uploads\/system\/uploads\/attachment_data\/file\/1079348\/Stablecoin_FMISAR_Consultation.pdf\">has published<\/a> for public consultation a document introducing additional safeguards against the collapse of stablecoins.<\/p>\n<p>The department recommended granting the Bank of England authority to address potential systemic disruption in the operations of stablecoin issuers, digital-wallet providers and third-party payment systems.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>&#8220;This will enable it [the Bank of England] to fulfil its statutory role in relation to financial stability,&#8221; the document says.<\/p>\n<\/blockquote>\n<p>The Treasury emphasised the importance of ensuring &#8220;effective application of existing legal frameworks for risk management&#8221; in the event of a digital-asset issuer&#8217;s bankruptcy.<\/p>\n<p>The consultation will run until 2 August, after which it will be considered by Parliament.<\/p>\n<p>The initiative follows the collapse of the Terra ecosystem. On 8 May, the algorithmic stablecoin TerraUSD (UST) lost its peg to the US dollar.<\/p>\n<p>On 10 May the asset&#8217;s price fell below $0.62. The decline continued on 11 May, after which the LUNA cryptocurrency, used to mint UST, collapsed to $0.3.<\/p>\n<p>The market reacted to the UST collapse with a drop in the price of Bitcoin <a href=\"https:\/\/u1f987.com\/en\/news\/bitcoin-price-slips-below-27000-ethereum-tests-1800\">fell<\/a> to around $26,700, roughly in line with late-2020 levels. On the same day, the stablecoin USDT briefly <a href=\"https:\/\/u1f987.com\/en\/news\/usdt-stablecoin-deviates-from-its-peg-to-the-us-dollar\">lost parity with the US dollar<\/a>.<\/p>\n<p>Earlier the Treasury<a href=\"https:\/\/u1f987.com\/en\/news\/uk-treasury-to-legalise-stablecoins-and-issue-nfts\"> announced plans to legalise stablecoins<\/a> and to issue its own NFTs. This move aims to position the UK as a friendly jurisdiction for digital assets.<\/p>\n<p>In mid-May the department<a href=\"https:\/\/u1f987.com\/en\/news\/british-treasury-rules-out-legalising-algorithmic-stablecoins\"> ruled out<\/a> legalising algorithmic stablecoins, as they &#8220;do not guarantee stability&#8221;.<\/p>\n<p>Sarah Pritchard, the UK Financial Conduct Authority&#8217;s chief executive, urged that the TerraUSD collapse be taken into account when shaping the regulatory framework for the industry.<\/p>\n<p>Subscribe to ForkLog News on Telegram: <a href=\"https:\/\/t.me\/forklogfeed\" target=\"_blank\" rel=\"nofollow noopener\">ForkLog Feed<\/a> \u2014 the full news stream, <a href=\"https:\/\/telegram.me\/forklog\" target=\"_blank\" rel=\"nofollow noopener\">ForkLog<\/a> \u2014 the most important news, infographics and opinions.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Her Majesty&#8217;s Treasury has published for public consultation a document introducing additional safeguards against the collapse of stablecoins.<\/p>\n","protected":false},"author":1,"featured_media":62306,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"1","news_style_id":"1","cryptorium_level":"","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[3],"tags":[36,807,810],"class_list":["post-62305","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-and-analysis","tag-regulation","tag-stablecoins","tag-united-kingdom"],"aioseo_notices":[],"amp_enabled":true,"views":"18","promo_type":"1","layout_type":"1","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/62305","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/comments?post=62305"}],"version-history":[{"count":1,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/62305\/revisions"}],"predecessor-version":[{"id":62307,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/62305\/revisions\/62307"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/media\/62306"}],"wp:attachment":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/media?parent=62305"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/categories?post=62305"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/tags?post=62305"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}