HM Treasury has recently submitted for public comment a document that introduces a series of additional measures aimed at protecting against the collapse of “stablecoins” just like the UST. On May 8, the algorithmic stablecoin TerraUSD (UST) lost its peg to the US dollar.
The agency has recommended to transfer to the Bank of England authority to address potential systemic disruption to stablecoin issuers, digital wallet providers, and third-party payment processors.
Per the document:
“This will allow the Central Bank to fulfill its statutory role in relation to financial stability.”
The Treasury has emphasized the importance of ensuring “the effective application of existing legal frameworks for risk management” in the event bankruptcy of an issuer of digital assets.
The discussion of the document will last until August 2, and after that, it will be considered in parliament.