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UK introduces legislations to protect consumers from stablecoins

UK legislation stablecoin_IFM_Image
The new legislation would require issuers to obtain a banking charter

Lawmakers in the UK have introduced a new legislations aimed at protecting consumers from the risk associated with stablecoins such as Facebook’s Diem, media reports said. As per the new legislation, now issuers would require to obtain a banking charter.

The new legislation was introduced by three Democrat members of Congress – Rashida Tlaib, Jesus ‘Chuy’ Garcia, and Stephen Lynch. Called the Stablecoin Tethering and Bank Licensing Enforcement (Stable) Act, it aims to ensure the issuance and related commercial activities of such currencies are strictly regulated.

Rashida Tlaib told the media, “Getting ahead of the curve on preventing cryptocurrency providers from repeating the crimes against low- and moderate-income residents of colour that traditional big banks have is—and has been—critically important.

“From the OCC to the Federal Reserve to those peddling stablecoins, the protections the Stable Act would make possible are more needed than ever amid a pandemic that will breed riskier financial decisions out of necessity because our federal government continues to fail us all by not providing adequate relief legislation.”

The UK Treasury also claimed that legislations would be introduced so that stablecoins are held to the same standard as rival payment methods. Chancellor Rishi Sunak tweeted that the Treasury would “publish a consultation to ensure new privately-issued currencies, stablecoins, meet the high standards we expect of other payment methods.”

Recently, Facebook has rebranded its cryptocurrency Libra as Diem in a bid to seek regulatory approval and to show that the project has organisational independence, media reports said. The independent organization that runs the project, the Libra Association, will now be known as the Diem Association.

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