The United Kingdom government released a consultation paper on May 31 that recommends improving the current legislation to face risks related to stablecoins. The news came after the Terra ecosystem's collapse. The paper suggests giving the Bank of England additional power to manage the administration of failed stablecoin founders.
Related: UK Central Bank Plans to Develop Crypto Regulations
According to the regulators, it is planned to create the environment for issuers and service providers of stablecoins to operate and develop safely in the UK, expanding consumer choice and efficiency. The government also emphasized the need to ensure appropriate tools to mitigate the financial stability problems that may materialize should a firm that has reached systemic scale fail.
In Jan. 2021, Her Majesty's Treasury released a consultation and call for evidence asking views from stakeholders on the UK regulatory approach to cryptos and stablecoins. Responding to the consultation, the government verified in April 2022 its intention to propose legislation that will put regulatory regimes for electronic money payments.