Due to the chaos in the cryptocurrency market caused by the collapse of the stabilization currency terra, UK regulators said they would pay close attention to Terra and create a customized regulatory system when needed. In the past two weeks, due to the continued selling of the holders, the price of the stable currency terrausd has fallen to less than 10 cents and is rapidly deviating from its expected pegged US $1.
Sarah Pritchard, the executive director in charge of markets of the financial conduct authority (FCA), said that when regulators began to cooperate with the Ministry of Finance later this year to formulate and implement new rules for encrypted assets, the instability of stabilizing the asset market in the near future "absolutely needs to be taken into account".
Pritchard, who oversees FCA encryption, said on Wednesday: "if it works well, innovation will continue. Obviously, we have seen the consequences and possible problems." She quoted an opinium survey released by the FCA last October as saying that nearly 70% of adults aged 40 and under buy cryptocurrency and mistakenly believe that digital assets are regulated.
Stable currency is an important part of the encryption ecosystem. Traders use stable currency as a means to maintain stable value without converting tokens back to legal tender. Investors can use it as a safe haven for their portfolios during fluctuations, or just as a means of digital payment.
Pritchard said, "this really shows that there are major problems in [the stability currency], whether in terms of good market operation or consumer protection." "Last week, we saw significant price fluctuations, which makes this particularly important. It shows that it is important to ensure that people understand the risks where they invest."
The UK Treasury said in April that it intended to amend existing legislation for e-money and payment companies to include the issuance of stable money, the provision of wallets and custody services. Companies involved in stable currency activities may need the supervision of the Bank of England and the authorization of the FCA if their services are used by a large number of consumers, as they may pose systemic risks.
In addition to the UK, US Treasury Secretary Yellen once said after this incident that Terra's collapse once again reflected the risk of stabilizing the currency, and said that it was necessary to further strengthen the supervision of stabilizing the currency and legislate as soon as possible; Klaas knot, chairman of the US financial stability board, raised concerns that the cryptocurrency industry may damage the currency network in the future; The European Commission is considering strict restrictions on the wide use of stable currency, requiring the issuance of stable currency to be stopped when the daily trading volume exceeds 1 million, and so on.