UK FCA Believes Crypto Regulations Have To Take Terra’s Collapse In Account

The UK FCA believes crypto regulations have to take Terra’s collapse into account so the new rules are being developed properly as we can see more today in our latest cryptocurrency news.

The UK FCA will need to take into account the recent market instability when starting to work on its new regulatory framework for cryptos this year. This is according to the executive director for markets Sarah Pritchard who shared her view on the collapse of TerraUSD stablecoin and the LUNA token last week:

“Innovation lasts if it works well, and clearly, we’ve seen the consequences and some of the issues that can arise.”

Pritchard also cited a survey from the FCA last October which claims that about 69% of the adults below 40 years who invested in crypto believed that they were regulated by the FCA and so they were unlikely to understand the lack of investor protection and the risks involving their money:

“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. It shows the importance of making sure that people understand that that is a risk of where they put their money.”

As a result of the TerraUSD debugging from the US dollar a week ago, the stablecoin crashed from $1 to $0.15 and it is trading at the fractions of a cent recently. That’s why the UK FCA believes the new regulations should take into consideration what happened to Terra recently. The LUNA token was once worth $100 and it is now trading for less than a cent. Bitcoin was used to maintain terra’s stability and it also posted major losses. The leading cryptocurrency was trading at $43,000 but then crashed to $26,000 last week.

BTC is now up by 3% in the past 24 hours and changed hands at about $30,238. Pritchard’s remarks came less than two months after the UK Finance ministry announced plans to become the global crypto tech hub. According to the statements from the Treasury, the plans will see the existing legislation for electronic money and payments companies amended to include the issuance of stablecoins and be used as a recognized form of payment. UK Chancellor Rishi Sunak said:

“We want to see the businesses of tomorrow—and the jobs they create—here in the UK, and by regulating effectively we can give them the confidence they need to think and invest long-term.”