UK to regulate stablecoins

Leading players into Fintechs and crypto asset providers have welcomed the UK government’s decision to bring stablecoins into regulatory scope as part of the recently published Financial Services and Markets Bill and the bill is one of the first major financial regulatory steps to be taken since the UK left the European Union.

The changing market of cryptocurrencies and the rising demand for the same has resulted in many countries taking a second look at their policies. While some are reverting to ignoring the prospect of advancement in finance out of sheer lack of awareness like India, others are changing their decision to be more in favour of adopting new technologies, such as the UK.

The UK government’s announcement that it will introduce a bill to regulate how stablecoins can be used as a formal method of payment shows governments are warming up to the idea of stablecoins, and that they will be part of the UK's economic future. This is also a very welcome development following the collapse of UST, which led many outside the crypto space to unfairly assume that all stablecoins are risky.

The majority of decentralized stablecoins are fully backed by crypto assets, as users lend their cryptocurrency to borrow the stablecoin of their choice. This provides users with a novel way to borrow and allocate their capital without selling their cryptocurrency.

It is clear that the world's major economies don't want to be left behind regarding blockchain technology, and stablecoins aren't on the decline but growing. Finally, bringing stablecoins into the scope of regulation is a significant milestone.