Treasury Undersecretary His Highness has submitted for public comment a document that introduces additional measures against the collapse of stablecoins.

The agency recommended delegating the Bank of England to address a possible systemic outage to stablecoin issuers, digital wallet providers and third-party payment processors.

“This will let him [ЦБ] they are fulfilling their legal role regarding financial stability”.

The Treasury highlighted the importance of ensuring “effective enforcement of existing legal frameworks for risk management” should a digital asset issuer go bankrupt.

Discussion of the document will continue until August 2, after which it will be discussed in the parliament.

Authorities proposed the initiative after the collapse of the Terra ecosystem. On May 8, the algorithmic stablecoin TerraUSD (UST) lost its pegged value against the US dollar.

On May 10, the asset’s prices fell below $0.62. The decline continued on May 11, after which the LUNA cryptocurrency used to issue the UST fell to $0.3.

The market reacted bearish to the collapse of the UST. On May 12, the bitcoin price dropped to $26,700, which is comparable to the end of 2020 level. On the same day, the USDT stablecoin briefly lost par against the US dollar.

Earlier, the Treasury announced its plans to legalize stablecoins and issue its own NFTs. The move aims to designate the UK as a digital asset-friendly jurisdiction.

In mid-May, the agency rejected the legalization of algorithmic stablecoins as they “do not guarantee stability.”

As a reminder, the Executive Director FCA Sarah Pritchard called for the collapse of TerraUSD to be considered while working on the regulatory framework for the industry.