UK Government Takes Steps To Make Stablecoins A Form Of Payment
On July 19, Nadhim Zahawi, Chancellor of the Exchequer of the United Kingdom, said the government will introduce a bill to define how stablecoins can be used as a means of payment.
The bill follows the Treasury’s wish to explore measures designed to improve the competitiveness of the UK tax system with regard to cryptocurrencies, to study the legal status of DAOs and to launch a sandbox of market infrastructure for digital businesses in 2023.
The move comes as regulators in the West continue to grapple with the challenges and opportunities of digital tokens pegged to reserve currencies such as the US dollar and algorithmic stablecoins that are more opaque.
In May, the Terra ecosystem collapsed after its algorithmic stablecoin, UST, slipped its peg and cratered. Its failure sparked a sell-off in crypto markets and contributed to the failure of other big players such as Three Arrows Capital, the $10 billion hedge fund that recently filed for bankruptcy. US Treasury Secretary Janet Yelles has called on Congress to introduce legislation this year as part of a crackdown on stablecoins.
The UK, famous for its “light” approach to financial regulation, has taken a more lenient approach. In April, the UK Treasury recognized stablecoins as a “valid form of payment”.
Stablecoin issuers seem to have prepared for the UK’s pro-stablecoin shift.
On June 22, Tether, the company behind the largest centralized stablecoin USDT, said this month it will launch a stablecoin pegged to the pound sterling called GBPT. The company cited the UK Treasury’s April consultation, saying the government had said it would “take steps to ensure that stablecoins are recognized as a valid method of payment.”
On July 11, Blackfridge, an Isle of Man-based fintech company, spear its own GBP tracking stablecoin called Poundtoken. The token is believed to be fully backed by GBP, the company affirming to have instructed KPMG to provide monthly certificates proving its reservations.
Binance previously launched a GBP-denominated stablecoin on its exchange