UK regulator to consider the collapse of Terra currencies in new crypto rules: Market volatility in stable coins should be taken into account, said the FCA’s managing director for markets.
When developing new rules for crypto assets, the U.K. Bloomberg said on Friday that the Treasurer of the Treasury and the Treasury will examine the decline of cryptocurrencies in the ecosystem Terra.
The latest market volatility in stablecoins should be “completely taken into account” when the Financial Behavior Commission works with the Treasury to formulate rules later this year, FCA Managing Director for Markets Sarah Pritchard told Bloomberg.
On May 13, Terra’s USD Algorithmic Staplecoin fell to 23 cents. An algorithmic staple coin theoretically maintains its peg using only software and rules, which means it does not need to be supported by the network. Instead, the programming of the token, or smart contract, can increase supply if prices fall or decrease supply if prices rise.
“Recent events in the crypto asset markets illustrate the need for appropriate regulation to help reduce the risks of consumer, market integrity, and financial stability,” a Treasury spokesman said. “The government will continue to work with regulators to address these risks as it develops its legislative approach.”
In March, the U.K. said it would work on a new crypto regulatory package and plans to regulate stable coins. In its consultation, the government proposed that the algorithm should not regulate stable coins.
The FCA was not immediately available for comment when contacted by CoinDesk on Friday.
