Following the $40 billion collapse of the Terra DeFi network, the UK’s financial authority is focusing on stablecoins, according to Bloomberg.
After chancellor Rishi Sunak promised to transform the UK into a crypto asset powerhouse, the Financial Conduct Authority (FCA) is scheduled to begin working with Her Majesty’s Treasury to sketch out the country’s crypto laws.
“[Stablecoins] will have to be taken into consideration,” said Sarah Pritchard, the FCA’s executive director for markets, who handles crypto (via Bloomberg).
“If it works well, innovation lasts,” she added. “Clearly, we’ve seen the ramifications and some of the challenges that can occur.”
TerraUSD is currently trading at $0.07, less than a tenth of the anticipated $1 peg – down 10% today alone. Unlike Tether (USDT) and USD Coin (USDC), which are supposed to be backed by cash reserves, UST’s peg was maintained by an algorithm. Until it couldn’t anymore.
UST, which was once the third-largest stablecoin in terms of market capitalization, began trading below its peg earlier this month. UST was followed into the red by LUNA, the cryptocurrency that supported the algorithmic token. In April, LUNA was worth over $100, but it is now worth barely over $0.0001.
Read more: Do Kwon, Terra’s founder, faces tax evasion allegations
