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The UK to focus cryptocurrency regulations on stablecoins

Updated: Jul 25, 2024
Published: Mar 30, 2021
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Cryptocurrency regulation has become a problem for most governments globally due to the broad nature of the crypto market. It is the reason why several governments are yet to have a comprehensive regulatory framework for cryptocurrencies. However, the UK government has a simple solution to this problem.

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Britain to focus on stablecoins regulation

The British government has announced that it would focus on regulating stablecoins instead of focusing on the entire cryptocurrency space. The country’s financial services minister stated this earlier today, highlighting that the government has to curtail potential threats from the stablecoins market.

John Glen told a City & Financial conference that the government needs to manage risks to competition. Several central banks globally became wary of stablecoins following Facebook’s move to launch the Libra coin in 2019. The stablecoin, now known as Diem, raised several privacy concerns amongst governments in Europe, the US and other parts of the world.

“There is the potential for some firms to swiftly achieve dominance and crowd out other players, due to their ability to scale and plug into existing online services,” the minister added. He pointed out that there is no pressing need to regulate the wider cryptocurrency market at the moment.

Stablecoins are gaining popularity

Stablecoins like the Diem, Tether (USDT), USDC, and others are designed to avoid the volatility of the regular cryptocurrencies. Glen noted that stablecoins account for the largest trading volumes in the crypto space. Although no major player has emerged in the stablecoin market, the government has to move to regulate them.

The minister highlighted that the UK would do all it can to promote innovation with blockchain technology and protect its interest using the novel tech. “We have a once-in-a-generation opportunity here to make vast strides in the efficiency of financial services and ultimately benefit consumers and the economy as a whole,” he added.

Stablecoins are gaining popularity as Visa announced yesterday that it would be using the USDC stablecoins to settle transactions on the Ethereum network. It is huge news for the stablecoins market as Visa became the first major payment platform to adopt them.

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