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Highlights
- UK FCA Executive Director of Markets Sarah Pritchard suggested that the recent depeggings will be one of the critical factors while drafting crypto rules of the country.
- On 23 May, the overall stablecoin market cap stood at US$160,011,839,299 with a trading volume of US$59,191,985,193.
- She added it also highlights the importance of the issue both from a consumer protection perspective and stability to the financial market.
The recent strings of stablecoin depeggings have left the market participants rattled. What started with Terra’s dip, which is supposed to match the US dollar, soon spread to other stablecoins, such as DEI, Tether, Fantom, etc. As of today, the stablecoin market cap has managed to stay afloat courtesy of other stablecoins, which didn't lose their peg.
Terra's collapse sparked a debate on the stability factor of the stablecoins, with several regulators now keenly studying recent incidents while drafting various crypto rules. The UK Financial Conduct Authority (FCA) has categorically stated that it will consider the collapse while making the laws.
Related read: Why is UK Treasury legalising stablecoins despite Terra crash?
On 23 May, the overall stablecoin market cap stood at US$160,011,839,299 with a trading volume of US$59,191,985,193. The overall market cap witnessed a minute rally of 0.19% at the time of writing and an overall volume gain stood at 41.16%.
On stablecoin depeggings
FCA Executive Director of Markets Sarah Pritchard suggested that the recent stablecoin collapse will be one of the critical factors while drafting crypto rules for the country.
She added that the recent depegging of TerraUSD (UST) and Tether (USDT) depegging from the US dollar highlighted the importance of the issue both from a consumer protection perspective and stability angle for the financial market.
Hence, Pritchard said that the FCA would consider the recent developments while drafting regulatory guidelines with Her Majesty's Treasury, which will be released later this year. Last week, the Treasury hinted that it would regulate the stablecoin and could also explore it as a payment medium.
Related read: What does Terra's (LUNA) realistic revival plan look like?
Additionally, the HM Treasury said it would review the tax implications on crypto assets, commission on a nonfungible token, and explore distributed ledger technology in the UK financial markets.
Taking steps one at a time
Both FCA and the Bank of England have been taking baby steps to ensure that their crypto rules will be airtight in providing customer protection and financial stability. The FCA had extended its temporary registration status for select crypto firms operating in the country to ensure that they were in line with the rules. As of now, FCA has granted temporary status to firms such as Copper, Revolut, etc.
What will be the eventual outcome and what steps will be taken by the regulators in the future remains to be seen. How investors will respond to the rules and regulations will be key to the future of cryptocurrencies in the UK.
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