On July 19th, Nadhim Zahawi, the chancellor of the Exchequer in England, said the government will introduce a bill that sets out how stablecoins can be used as payment.
The bill follows the Treasury's promise to explore measures designed to boost the competitiveness of the U.K. tax system regarding cryptocurrencies, examine the legal status of DAOs, and launch a market infrastructure sandbox for digital firms in 2023.
The move comes as regulatory bodies in the US continue to grapple with the challenges and opportunities of digital tokens pegged to reserve currencies like the U.S. dollar and algorithmic stablecoins that are more opaque.
In May, the ecosystem of the Earth collapsed, as its algorithmic stablecoin, UST, slipped its peg and cratered. Its failure led to a deep selloff in the crypto market and led to the failure of other big players such as Three Arrows Capital, the $10 billion hedge fund that recently declared bankruptcy. The US Treasury Secretary Janet Yelles has asked Congress to introduce legislation this year as part of a crackdown on stablecoins.
The UK, famous for its 'light touch' approach to financial regulation, has taken a softer stance. The UK Treasury recognized stable tokens as a 'valid form of payment' in April.
Stablecoin issuers appear to be gearing up for the U.K.'s pro-stablecoin shift.
On July 11, Blackfridge, a fintech firm in the Isle of Man, launched its own GBP-tracking stablecoin called Poundtoken. The token is fully backed by GBP, and the firm claims to have appointed KPMG to perform monthly attestations demonstrating its reserves.