UK to introduce bill to establish how stablecoins can be used as payment

UK to introduce bill to establish how stablecoins can be used as payment

Nadhim Zahawi, the chancellor of the Exchequer in the UK, said the government is to institute a bill to establish how stablecoins can be used as payment.

The bill reflects the Treasury's commitment to exploring measures designed to enhance the competitiveness of the UK 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 authorities across the West continue to wrestle with the challenges and prospects of digital tokens pegged to reserve currencies like the U.S. dollar and algorithmic stablecoins that are more opaque.

In May, the Earth's ecosystem collapsed because its algorithmic stablecoin, UST, slipped its peg and cratered. Its failure led to a deep selloff in crypto markets and played a significant role in the failure of other key players, including Three Arrows Capital, the $10 billion hedge fund that recently declared bankruptcy. The U.S. Treasury Secretary, Janet Yelles, has asked Congress to introduce a bill this year as part of a crackdown on stablecoins.

The U.K., famous for its 'light touch' approach to financial regulation, has taken a softer stance. In April, the UK Treasury recognized stable tokens as a valid form of payment.

Stablecoin issuers appear to be gearing up for the U.K.'s pro-stablecoin shift.

On July 11, Blackfridge, a financial tech firm based in Isle of Man, launched its own GBP-tracking stablecoin called Poundtoken. GBP is fully backed by the token, with the firm claiming to have appointed KPMG to provide monthly attestations demonstrating its reserves.