On Tuesday, the UK Treasury published an initial consultation about managing “systemic Failure” in digital assets. It also proposed enhanced protections for stablecoins.
It recommended the Bank of England have regulation. The Bank of England would have “powers of supervision over an appointed administrator” in case a digital settlement asset (DSA), falls into difficulties.
The consultation document stated that “this role will enable them to pursue their statutory role in regard to financial stability” and added that it was “important to ensure existing legal structures can be effectively applied to manage risks posed from the failure of systemic DSA companies.”
The Treasury’s request for responses closes on August 2, and will be reviewed by parliament in due time. The Financial Conduct Authority of the UK also plans to examine the aftermath of this month’s crash.
This move comes weeks after Terraform Labs’ algorithmic safecoin TerraUSD was destroyed by a death spiral. It is known by the ticker UST. In May, the stablecoin lost its US dollar peg and more than $40 billion in market capital. The token luna was also freed from fall.
