UK Regulator Scrutinizes Terra Fallout In New Crypto Rules

UK Regulator Looks to Implement New Crypto Rules

According to a report from Bloomberg, the recent market instability in stablecoins “will absolutely need to be taken into account” when looking to develop and implement new rules for cryptoassets later this year, said Sarah Pritchard, executive director for markets at the Financial Conduct Authority (FCA).

Nearly 70% of adults that are 40 or younger who bought crypto had incorrectly assumed that digital assets were regulated, she said, citing an Opinium survey published by the FCA in October.

Pritchard’s comments come in the wake of the collapse of Terra’s UST stablecoin and its sister token LUNA.

Regulating Stablecoins

In April, UK's Treasury said that it intends to amend existing legislation for electronic money and payments firms to include stablecoin issuers and the provision of wallets as well as custody services.

Per the regulator, firms that engage in stablecoin activities might require supervision by the Bank of England as well as authorization by the FCA if their services are used by a large number of consumers, due to the systemic risks they might pose.

In March, the UK said it will work on a new crypto regulatory package and planned to regulate stablecoins. In its consultation, the government proposed that algorithmic stablecoins should not be regulated.