According to Her Majesty’s Treasury representative, the Financial Services and Markets Bill proposes recognizing Stablecoins as payment. Speaking to the Telegraph, a leading newspaper in the UK, the spokesperson revealed that the new bill seeks to legislate the regulation of Stablecoins to integrate them into the financial system.
The financial bill is a culmination of a 12-months study of Stablecoins that has been underway in the UK. According to proponents of the study, Fiat-backed Stablecoins have the potential to transform the financial system as they offer a futuristic payment option. The study also examined the risk of custody services and provisions of private wallets. The new bill now seeks to harmonize the regulation of all aspects of Stablecoins to safeguard users’ interests and promote their adoption in the UK.
Stablecoins are Less Volatile Than Mainstream Cryptocurrencies
The Cryptocurrency market has been bearish since Friday the 6th after the Federal Reserve revised the interest rates. Over the last few days, the Crypto market has been oscillating from bears to intraday bulls, where it established new lows and new support levels from the short-term market perspective.
Stablecoins, on the other hand, have been relatively stable, hardly being affected by the market environment. For example, tokens such as the USDT and USDC are each backed by the US Dollar.
Algorithmic Stablecoins Are Under Sharp Focus
Not all Stablecoins are pegged against real assets such as Fiat currencies or financial instruments. Some values are determined by algorithmic trends configured to remain stable like the conventional Stablecoins.
One example of an algorithmic Stablecoins is the TerraUSD (UST). The token made headlines after tanking from $1 to $0.13. The development could reduce the investor confidence in Stablecoins that are not backed by real assets, which could negatively impact the adoption of Cryptos. The Financial Services and Markets Bill excludes this kind of Cryptos as they are not linked to any real asset.
However, leading Stablecoins such as Tether (USDT), Binance USD (BUSD), and the USD Coin (USDC) have been trading at $1 since their debut into the Crypto world. In most time-series data reviews, the value barely changes despite the dynamic trading volumes and the changing number of tokens in circulation.
There Are Plans to Make the UK a Crypto Asset Hub
According to Rishi Sunak, the Chancellor of the Exchequer, the bill seeks to make the UK a global Crypto hub. He adds that the Crypto market proffers many opportunities for the economy. For instance, it can lead to job creation and spur business opportunities.