U.K. to introduce bill to establish how stablecoins can be used

U.K. to introduce bill to establish how stablecoins can be used

On July 19, Nadhim Zahawi, chancellor of the Exchequer, said the government would introduce a bill to establish how stablecoins can be used as payment.

The bill follows the Treasury's promise to explore measures designed to enhance the competitiveness of the U.K. tax system regarding cryptocurrencies, study the legal standing of DAOs, and launch a market infrastructure sandbox for digital firms in 2023.

The move comes as regulators across the West 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 Earth's ecosystem collapsed due to its algorithmic stablecoin, UST, slipped its peg and cratered. It caused a widespread selloff in crypto markets and caused the failure of other major 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 legislation this year as part of a crackdown on stablecoins.

The U.K., known for its 'light touch' approach to financial regulation, has taken a softer stance. The U.K. Treasury declared stable tokens a 'valid form of payment' in April.

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

On July 11th, Blackfridge, a fintech firm in the island of Man, launched its own GBP-tracking stablecoin called Poundtoken. GBP backed the token, with the firm claiming to have appointed KPMG to provide monthly attestations demonstrating its reserves.