Global watchdogs will regulate stablecoins after the Terra fiasco which wreaked havoc on the market and urged the regulators to take action faster so let’s have a closer look at today’s latest cryptocurrency news.
The dramatic collapse of Terra’s UST stablecoin wreaked havoc on the industry and accelerated the plans to regulate the market. Following the market meltdown, the global watchdogs started proposing different legislations to regulate stablecoins to prevent similar incidents from occuring in the future. The UK revealed plans to legalize stablecoins as a payment medium and the reports show that the development includes plans to regulate stablecoins that came as a part of the financial legislation mentioned in the Queen’s speech:
“Legislation to regulate stablecoins, were used as a means of payment, will be part of the Financial Services and Markets Bill which was announced in the Queen’s Speech… This will create the conditions for issuers and service providers to operate and grow in the UK, whilst ensuring financial stability and high regulatory standards so that these new technologies can be used reliably and safely.”
The Treasury pointed out that UST’s failure is a testament to the fact that not all stablecoins are suitable as a reliable payment method and added that they are similar to be more volatile cryptocurrencies. While the organization has no plans to add stablecoins to the proposed legislation and noted that it will continue exploring the stability of the stabilized stable coins to take further regulatory action if required. To protect the digital asset investors in the South Korean market, the country‘s financial regulators launched an emergency check on the trends and are making plans to enact legislation to the goal.
Dubbed the Basic Act on Digital assets, the legislation will include consumer protection as the watchdogs aim to create an opportunity for the financial consumers to become aware of the risks of investing in the virtual assets as one official from a local exchange said:
“The most worrying thing about this incident is that the failure of the Terra coin can be seen as a failure of the entire cryptocurrency industry… Domestic regulations are in place.”
Per the reports, after careful consideration of the trends, and the virtual currency regulation laws in different countries, the Korean government will enact the Digital Asset Basic Act next year and will implement it in 2024. in the meantime, the US regulators called on the global financial regulators to work together and regulate the stablecoins market and avoid a repeat of the UST collapse.
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