DFC

What made the original version of dai so transgressive was its ability to recreate the dollar out of entirely censorship-resistant material. The new version of dai no longer relies solely on censorship-resistant material. But perhaps this new version is even more transgressive. It has secretly docked itself to the Federal Reserve by using USDC stablecoins as a bridging mechanism.

Xfers launched a Singapore dollar-pegged XSGD stablecoin. Xfers has a Monetary Authority of Singapore (MAS) Major Payment Institution (MPI) e-money issuance license. All XSGD tokens are backed 1:1 with Singapore Dollars held in Xfers’ reserve held in segregated accounts with a fully regulated MAS-approved bank. Xfers claims that XSGD is the world’s first stablecoin to be be compliant with the Financial Action Task Force’s travel rule, so financial institutions can use it for cross-border money transfers as well.

US dollar-pegged stablecoin Circle will add USDC support to Stellar’s array of products, among them payments tools, infrastructure APIs and business accounts products, by the first quarter of next year. Circle has long sought to end its dependence on the Ethereum blockchain. In June, it announced support for the Algorand blockchain.

The U.S. Office of the Comptroller of the Currency (OCC) stablecoin letter only address the permissibility of managing reserves for hosted wallets, which requires client onboarding and know-your-customer (KYC), and therefore limits its discussion to private stablecoin networks, and argues that this activity “would not contribute to the global and systemic nature noted” by the FSB. In contrast, the OCC may be suggesting that a public stablecoin’s network design, once launched, could not be walked back, and (absent controls) could provide new avenues for illicit activity at a speed and global scale not currently available.

Tether (USDT), with a market cap surpassing $16 billion, continues to hold the lion’s share of stablecoins in circulation, but two smaller rivals are trouncing it in crypto’s hottest market this year, decentralized finance (DeFi). Measured by the total value locked in six of the most popular DeFi protocols – Compound, Maker, Uniswap, Curve, Aave and Balancer – USD coin (USDC) is in the lead among stablecoins followed by dai (DAI), the native stablecoin to MakerDAO. USDC and DAI have market caps of $2.74 billion and $608 million, respectively.

The Solana blockchain has become an Official Chain for USDC, continuing the expansion of USDC as an open standard and protocol for fiat digital currency on blockchains. Solana offers significant scalability and speed, delivering upwards of 50,000tps, with block production and settlement finality in 400ms, while operating with extremely low cost transaction fees at a tiny fraction of a cent.

In light of their cross-border nature, stablecoin projects must work with regulators around the world to determine the appropriate regulatory treatment of this relatively new asset class.  With this in mind, this article seeks to provide an overview of how U.S. regulators are approaching the evolving world of stablecoins.

This BIS paper draws lessons on the central bank underpinnings of money from the rise and fall of the Bank of Amsterdam (1609-1820). The Bank started out as a "stablecoin": it issued deposits backed by silver and gold coins, and settled payments by transfers across deposits. Over time, it performed functions of a modern central bank and its deposits took on attributes of fiat money. The economic shocks of the 1780s, large-scale lending and lack of fiscal support led to its failure. Using monthly balance sheet data, we show how confidence in Bank money gave way to a run equilibrium, where the fall of the premium on deposits over coins ("agio") into negative territory was swift and precipitous. This holds lessons for the governance of digital money.

Wyoming recently awarded its second special-purpose depository institution (SPDI) charter to Avanti Bank. One of the most notable products that Avanti intends to offer is the “Avit” stablecoin "disruptor." Avanti Bank's Avit will be a tokenized, programmable US dollar. Becasue Avit will be issued by, and be a direct obligation of, a bank, making it an electronic version of a traditional bank note. This means the Avit can be used in software applications like other stablecoins but may be considered more reliable than traditional stablecoins because users can trust that the deposits backing the Avit are held in the same state chartered financial institution that issued the instrument. Critically, if the Avit is a bank note it is also exempt from regulation as a security by the SEC. One legal wrinkle is that Article 3 of the Uniform Commercial Code (UCC), which governs bank notes, has never before been directly extended to electronic negotiable instruments such as digital bank notes. Nevertheless, there is an argument that Article 3 provides the necessary legal framework for banks to issue a variety of electronic negotiable instruments, including digital certificates of deposits. One could argue that a bank issuing a product with features similar to a stablecoin is really just a new form of a traditional bank activity.

Circle, which along with Coinbase issues the USDC stablecoin, is coordinating with the US government and Latin America crypto exchange Airtm to route aid for Venezuelan healthcare workers through the Latin American country's government in exile. The US Treasury and Federal Reserve releases seized funds to the exiled government’s account at a US bank. The exiled government then uses those funds to mint USDC. The USDC is then sent to Airtm Once the USDC stablecoins hit Airtm wallets, they go to Venezuela healthcare workers in the form of AirUSD, Airtm's own fiat-backed stablecoin. Recipients can then withdraw at banks, send the funds, or spend them online.

Settle Network and Stellar are issuing two stablecoins in Latin America. The ARST is tied to the Argentine peso (ARS), while the BRLT is tied to the Brazilian real (BRL). The new stablecoins allow users to virtually send ARS and convert them to BRL in a matter of seconds, opening a new possibilities for international remittances and cross border payments.

This paper overviews stablecoin stability mechanisms, the current stablecoin market landscape, and the performance of major stablecoins during the 2020 financial market crisis due to the COVID-19 pandemic. Results from this analysis indicate that stablecoins’ performance during the financial crisis and, in particular, the market crash present a direct relation with their specific behavior attributed to different design aspects, including their popularity.

Tethers are the main source of liquidity for unbanked crypto exchanges, which account for most of bitcoin’s trading volume. Currently, there are $18 billion (notional value) worth of tethers sloshing around in the crypto markets. And nobody is quite sure what’s backing them. Due to Tether’s lack of transparency, its failure to provide a promised audit, and the fact that the New York AG is currently probing the firm along with crypto exchange Bitfinex, its sister company, for fraud, a good guess is nothing. Tethers, many suspect, are being minted out of thin air.

Circle, an issuer of stablecoin USDC, belatedly announced that it had partnered with the opposition Guaidó government to deliver financial aid to Venezuelan health care workers. Circle says it helped to get million of dollars to Venezuelans by leveraging "the power of USDC...to bypass the controls imposed by Maduro over the domestic financial system, and stablecoins have now become a tool of US foreign policy. But if you pick through the transaction chain carefully, USDC's role was trivial and that leg of the transaction could have been done via Fedwire, the Federal Reserve's large value payment system.

Facebook-led digital currency Libra is reportedly preparing to launch as early as January, in a single coin backed one-for-one by the dollar. The other currencies and the composite would be rolled out at a later point. Libra’s exact launch date would depend on when the project receives approval to operate as a payments service from the Swiss Financial Market Supervisory Authority. The Novi wallet was ready from a product perspective, but would not be rolled out everywhere initially, with the company prioritising half a dozen high-volume remittance corridors including the United States and some Latin American countries. Novi needed its own licence in each U.S. state, sand is till waiting on up to 10, including a New York Bitlicense.

Basis Cash (BAC) is based on the stablecoin Basis that had $133 million in funding before U.S. securities regulators stepped in and the team behind it returned everything in late 2018. Like most stablecoins, BAC is pegged to the U.S. dollar, so one BAC should be equal to the crypto equivalent of one USD. Basis Cash’s price will be managed by two other crypto assets: Basis Bonds and Basis Shares. 50,000 BAC will be distributed over a five-day period (10,000 per day) to folks that deposit DAI, yCRV, USDT, SUSD and/or USD into its smart contract.

Visa is connecting its global payments network of 60 million merchants to the U.S. Dollar Coin (USDC) developed by Circle Internet Financial on the ethereum blockchain. The digital currency is now valued at $2.9 billion. While Visa itself won’t custody the digital currency, effective immediately, the partnership will see Circle working with Visa to help select Visa credit card issuers start integrating the USDC software into their platforms and send and receive USDC payments.

Rohan Grey, the legal scholar who helped draft the controversial Stablecoin Tethering and Bank Licensing Enforcement (STABLE) Act with Congresswoman Rashida Tlaib, wants you to know that he cares about anonymous digital cash—but he’s not about to give a free pass to those who he believes pose a systemic risk to the US monetary system.

A payments revolution has prompted a proliferation of shadow digital money. This money is unsound. It is not insured by the government, nor is it backed by safe assets. Federal regulation is needed to guarantee safety and soundness, to restore full monetary control to the Federal Reserve, and to prevent a race to the bottom between competing state and federal regulatory regimes. The OCC should recommend that Congress enact new legislation that requires MSBs to back their monetary liabilities 1:1 with bank deposits. With this change, innovation in payments would be just that—innovation in payments—and not also unauthorized and unsound money issuance.

Facebook could be in hot legal water after rebranding its upcoming crypto project to Diem — a name already taken by a London fintech. Finance app Diem is threatening to sue Facebook and its partners for copying the name, telling Sifted it is preparing to take action. The Diem app allows consumers to sell their possessions instantly, rather than waiting for bidders on eBay; offering a digital pawnbroker of sorts. Users also get their own DIEM debit cards and accounts, creating what the company calls a ‘Bank of Things.’

The plain text of the Stable Act presents the bizarre possibility, one which is apparently intended by the drafters, that node operation on any unlicensed chain that supported any stablecoin contracts would be unlawful and, pursuant to 12 U.S. Code § 1833a, would be subject to fines of up to $1,000,000. Criminal penalties might also be possible. This post deals with this point.

Germany's Bankhaus von der Heydt (BVDH) has issued a Euro stablecoin (EURB) on the Stellar network with the collaboration of Bitbond, a German tokenisation and digital asset custody technology provider. With the go-live on Stellar, Bitbond also integrates the stable coin into the securitization platform developed for BVDH, including the automatic mining and burning of tokens. The Federal Financial Supervisory Authority (BaFin) has already provided their approval for Bitbond to issue tokenized bonds on Stellar.

The first live trades JPMorgan conducted were between the bank’s broker-dealer and banking units, using the Onyx blockchain platform. In a test environment, JPMorgan has also traded with Goldman using Bank of New York Mellon Corp. as the triparty agent. Goldman is expecting to join Onyx for intraday repo trading as soon as January.