After both terraced (UST) and terra failed, the British Treasury Department reaffirmed its plan to regulate Bitcoin trading bot in the future (LUNA). A UK Treasury spokesperson said, “This will give issuers and service providers the rules they need to run their businesses and grow in the UK. It will also make sure that the economy is stable and that strict rules are followed.”
What does it mean for coins to be “stable”?
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If an investor wants their money at any time, they will get the same number of dollars as the number of stablecoins they turned into dollars. Stablecoin issuers must keep the same amount of cash on hand as the number of tokens in circulation.
CoinGecko says that the total value of all stablecoins on the market right now is more than 160 billion dollars. The most valuable cryptocurrency is Tether, which has a market value of more than $80 billion.
How the British keep their coins stable
The Telegraph reported on Saturday that the UK’s Treasury Department, “HM Treasury,” is moving forward with plans to regulate payment stablecoins. Even though the price of bitcoin dropped last week, this is still happening.
After Terra’s failure, there was confirmation. This broke the link between the terraced (UST) algorithmic stablecoin and the US dollar. This didn’t make things much better (LUNA).
The Queen’s Speech says that the Financial Services and Markets Bill is being written right now. This bill says how goods can be bought with stablecoins.
The representative says, “This lets issuers and service providers do business and grow in the UK.” The economy will stay stable, and strict rules will be put in place to make sure that new technology is used in a safe and reliable way. Because of this, businesses in the financial sector of the United Kingdom will be able to grow.
Prince Charles gave the Queen’s Speech the week before. It laid out the government’s plans for the next year in terms of legislation. Two of the projects that are done are all about digital assets.
In April, the British government said that one of its goals was to make the country a “welcoming home for crypto” and a global hub for cryptocurrencies. The strategy calls for the creation of a flexible legal framework for cryptocurrencies, the regulation of stablecoins, and talks with the Royal Mint by the summer about the creation of a non-fungible token (NFT).
The British chancellor of the exchequer, Rishi Sunak, said that the strategy will “ensure that the United Kingdom’s financial services sector stays at the forefront of technology and innovation.”
The Department of the Treasury, on the other hand, does not plan to add algorithmic stablecoins to the law because, from their point of view, these coins do not ensure stability. Due to the algorithm that runs it, Terrausd (UST) is a stable cryptocurrency.
Why do the people in charge look so nervous?
The biggest worry is that there will be a “run on the bank” near a big stablecoin provider like
Tether. Yellen and other experts in the US often compare them to money market funds. The first money market fund, the Reserve Primary Fund, lost $1 per share in net asset value in 2008. In 2008, this took place.
Lehman Brothers kept some of the fund’s assets in the form of short-term business debt called “commercial paper.” When Lehman Brothers went out of business, investors left.
Tether has said in the past that its reserves are all dollars. But in 2019, after making a deal with the attorney general of New York, it completely changed its mind. The company’s reports said that it had very little cash on hand but a lot of unidentified commercial paper.
