The UK Government plans to regulate stablecoins, as do many other governments. The UK also wants to stimulate innovation and the crypto industry, but the country wants to do so in a safe way. However, the government is clearly not a fan of Terra, and especially terraUSD (UST).

This is according to The Telegraph, which has spoken to a number of government spokespersons. Last month, the government announced that it would introduce ” world-class stablecoin regulations.” The UK is often praised around the regulation of cryptocurrencies, because companies know more clearly where they stand. Many other countries can learn from this, including the Netherlands and the United States. Finance Ministry’s Rishi Sunak says the UK’s financial services sector will always remain at the forefront of technology and innovation.

How the regulation of stablecoins will work out is not yet completely clear, but we know that it should provide a lot of security around payments and the protection of the value of the tokens. Anti-money laundering measures (Anti-Money Laundering, AML) and identification rules (KYC, Know-Your-Customer) will undoubtedly also be part of the package. Those rules are already pretty tight in the country group for crypto in general.

UK not a fan of TerraUSD (UST)

More interestingly, the UK has clearly moved away from stablecoins similar to Uusd (UST). To be precise, algorithmic stablecoins will not be regulated because algorithms cannot guarantee the value. UST is an algorithmic stablecoin, but it is not the only one. The decision is not so unexpected, because UST crashed hard when the Terra ecosystem collapsed.

Thus, these tokens will not be in the “safe zone”, but they do not seem to be banned. Apparently, the ministry thinks that it is enough to clearly indicate what can and cannot be done through the bracket, and that investors have enough further on their own research. It also means that some other stablecoins that do have collateral will remain legal.