Sarah Pritchard, the executive director of markets at the United Kingdom’s Financial Conduct Authority, or FCA, reportedly said the regulator will look at the recent volatility in the crypto markets when creating rules for the space in 2022.
According to a Friday Bloomberg report, Pritchard said the financial regulator will “absolutely” take into account stablecoins like TerraUSD (UST) and Tether (USDT) depegging from the U.S. dollar in drafting regulatory guidelines with Her Majesty’s Treasury for release later this year. While the USDT price only briefly dropped to $0.97 on May 12, UST’s has fallen more than 93% since May 9 to reach roughly $0.06 at the time of publication.
“It really shows at front of mind the really significant issues that exist here, both in terms of a well-functioning market and obviously consumer protection,” said Pritchard. “In the last week where we saw significant price movements, it brings that into the fore and it shows the importance of making sure that people understand that that is a risk of where they put their money.”
The United Kingdom’s Economic and Finance Ministry announced in April that it would work to incorporate stablecoins into a regulatory framework on digital assets, given they could become “a widespread means of payment” for retail customers. In addition, HM Treasury said it would move forward with initiatives including reviewing tax legislation as applied to crypto assets, commissioning a nonfungible token, or NFT, for the Royal Mint, and exploring distributed ledger technology for use in U.K. financial markets.
U.K. regulators as well as the Bank of England Financial Policy Committee said in March they were assessing crypto regulations in the country, specifically noting they “welcomed” HM Treasury’s proposals for incorporating stablecoins into the existing framework. The FCA also announced it had extended the temporary registration status of some firms offering crypto services beyond its original March 31 deadline. At the time of publication, five companies are permitted to “carry out crypto asset activities” under this temporary status, including Copper, CEX.IO, and Revolut.