The UK Treasury has proposed legislation to regulate cryptocurrency companies.
The consultation paper was published on May 31st in the wake of the Terra LUNA crypto and UST stablecoin collapse, which sent the entire sector into a downward spiral.
The paper highlighted the importance of stablecoins in innovation but also their impact upon wider financial stability, should systemic failures occur.
It called for amendments to existing legislation around the Financial Market Infrastructure Special Administration Regime (FMI SAR), which was established to address the risks posed by the systemic failure of payment systems.
The new rules as proposed would give the Bank of England with oversight over cryptocurrency firms, with the power to appoint an administrator in the event of a failure.
In addition to the mandate to ensure continuity of services for firms that reach insolvency, the paper said, amendments would include an additional objective to ensure the return or transfer of customer funds and custody assets.
“Continuity of service may not be sufficient to mitigate risks to financial stability arising from the failure of a systemic DSA (digital settlement asset) firm, particularly where large numbers of individuals may lose access to funds and assets they have chosen to hold as DSAs,” the paper said.
A DSA could include stablecoin issuers, wallet providers and third-party payment providers.
“The government considers that it is important to ensure existing legal frameworks can be effectively applied to manage the risks posed by the possible failure of systemic DSA firms for the purposes of financial stability,” it also read.
The consultation period ends on August 2nd and will be put before Parliament at a later date.
Cryptocurrency shorts
Forbes has shelved its plan to go public via a SPAC merger, reports the New York Times. Crypto exchange Binance revealed a $200m investment into the media outlet and Hong Kong-based shell company Magnum Opus Acquisition in February. A merger would have valued Forbes at $630m, but the decision to walk away has reportedly been made due to the poor performance of recent SPACs.
South Korea’s government has greenlit £117.1 million investment for central metaverse projects. It is already building a metaverse platform to provide citizens with virtual public services and plans to establish a ‘K-metaverse academy’ to support metaverse startups from around the world, with the goal of producing 40,000 professionals in the space by 2026.
Singaporean authorities have launched a digital asset pilot program to examine the potential of decentralised finance – ‘Project Guardian’ – in partnership with JP Morgan., Marketnode and DBS Bank.
Active users in leading Ethereum-based blockchain games – including Axie Infinity, The Sandbox and Decentraland – have declined by 96% from November 2021 peaks, according to a new report from Arcane Research.
Crypto prices
The overall market cap of the more than 19,600 coins is at $1.3 trillion at the time of writing (7am UK), a 1% decrease in the last 24 hours.
Market leader Bitcoin – the original cryptocurrency created by the mysterious Satoshi Nakamoto – dropped slightly to around $31,600. BTC is 6% up in a week.
Ethereum, the second most valuable crypto coin – created as a decentralised network for smart contracts on the blockchain – fell 3% to $1,930. ETH is 3% down over the course of a week.
Binance Coin is a cryptocurrency created by popular crypto exchange Binance to assist its aim in becoming the infrastructure services provider for the entire blockchain ecosystem. Its BNB token dropped slightly to $318, leaving it 4% down over seven days.
Cardano is an open source network facilitating dApps which considers itself to be an updated version of Ethereum. Its ADA token, designed to allow owners to participate in the operation of the network, added shed 7% to 60 cents yet is 16% up over the course of a week.
The XRP token of Ripple, a payment settlement asset exchange and remittance system, acts as a bridge for transfers between other currencies. XRP lost 2% to drop below 42 cents but is 3% up over seven days.
Solana is a blockchain built to make decentralised finance accessible on a larger scale – and capable of processing 50,000 transactions per second. Its SOL token dropped 6% to $44.70 and is down 9% compared with a week ago.
Meme coin DOGE was created as a satire on the hype surrounding cryptocurrencies but is now a major player in the space. DOGE shed 1% to 8.6c, leaving it 3% up in a week.
Polkadot was founded by the Swiss-based Web3 Foundation as an open-source project to develop a decentralised web. Its DOT token, which aims to securely connect blockchains, lost 2% to $10.27 and is 2% higher than its price a week ago.
Avalanche is a lightning-quick verifiable platform for institutions, enterprises and governments. Its AVAX token fell 8% to $25.53 and is 11% down in a week.
To see how the valuations of the main coins have changed in recent times – and for round-ups of recent cryptocurrency news developments – click here.
For valuations of the top 100 coins by market cap in US dollars, plus 24-hour price change, see below.