UK proposes plans to manage failing stablecoins

By Ovunc Kutlu

ANKARA (AA) - The UK proposed plans Tuesday to manage failing stable coins in cryptocurrency markets and avoid stability risks.

"The government has made a firm commitment to place the UK’s financial services sector at the forefront of crypto asset technology and innovation," Her Majesty's Treasury wrote in a consultation report.

"It is taking a staged and proportionate approach to crypto asset regulation, which is sensitive to risks posed and responsive to new developments in the market. This approach will focus on stable coins in the first instance given their potential to develop into a widespread means of payment," it added.

The move comes after controversial stablecoin, TerraUSD, known as UST, which was initially designed to be pegged one-to-one to the dollar, saw its price plummet to almost $0 in recent weeks.

South Korean prosecutors have summoned all employees at Terraform Labs -- the company behind UST, its sibling Luna Classic and new form Terra 2.0 -- to investigate the price collapse

The UK stressed it wants to ensure that existing legal frameworks can be effectively applied to manage the risks posed by the possible failure of systemic digital settlement asset firms.