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Stablecoins: How Do They Work, How Are They Used, and What Are Their Risks?
Stablecoins: How Do They Work, How Are They Used, and What Are Their Risks?
Alexis Goldstein, Director of Financial Policy, Open Markets Institute testified before the US Senate Committee on Banking, Housing, and Urban Affairs on how stablecoins work, how they are used, and their risks. "There are many investor, national security, and usability concerns with both algorithmic and asset-backed stablecoins. Congress should continue to examine if there are regulatory gaps that require new legislation to ensure consumer and investor protection as it relates to stablecoins, and regulators should continue to monitor stablecoins and ensure compliance with existing laws."
#Fintech#CryptoAssets#Stablecoins#Regulation#DFC
·banking.senate.gov·
Stablecoins: How Do They Work, How Are They Used, and What Are Their Risks?
Terra's UST Flips DAI to Become Fourth-Largest Stablecoin
Terra's UST Flips DAI to Become Fourth-Largest Stablecoin
Terra’s U.S. dollar-pegged stablecoin UST is now the #4 stablecoin on the market (about $9 billion) but it's very different from the three that sit above it. Tether's USDT ($77 billion), USD Coin's USDC ($42 billion) and Binance's BUSD ($15 billion) are run and managed by centralized entities, and the assets that back them (reportedly 1:1) are also centralized. However, UST is a decentralized stablecoin backed by other cryptocurrencies. Terra itself is a layer 1 smart contract-enabled network built using the Cosmos software developer kit, and UST is minted by users by “burning” (destroying) LUNA, Terra’s native token responsible for paying transaction fees and participating in governance. DAI, the #5 stablecoin (just under $9 billion), is also cryptocurrency backed.
#Fintech#CryptoAssets#Stablecoins#Terra#DAI#DFC
·decrypt.co·
Terra's UST Flips DAI to Become Fourth-Largest Stablecoin
PayPal Explores Launch of Own Stablecoin in Crypto Push
PayPal Explores Launch of Own Stablecoin in Crypto Push
PayPal is exploring the launch of its own stablecoin as part of its cryptocurrency push. Evidence of the company’s exploration into building a stablecoin was first discovered in PayPal’s app by developer Steve Moser. Hidden code and images show work on what is dubbed a “PayPal Coin.” The code indicates such a coin would be backed by the U.S. dollar. A PayPal spokeswoman said that the images and code inside of the PayPal app stemmed from a recent internal hackathon.
#Fintech#CryptoAssets#Stablecoins#PayPal#DFC
·bloomberg.com·
PayPal Explores Launch of Own Stablecoin in Crypto Push
Hong Kong Monetary Authority - Discussion Paper on Crypto-assets and Stablecoins
Hong Kong Monetary Authority - Discussion Paper on Crypto-assets and Stablecoins
The Hong Kong Monetary Authority (HKMA) released a Discussion Paper that lays out its thinking on the regulatory approach for crypto assets, particularly payment-related stablecoins. Members of the public and the industry are welcome to submit their responses before March 31, 2022.
#Fintech#CryptoAssets#Stablecoins#DFC
·hkma.gov.hk·
Hong Kong Monetary Authority - Discussion Paper on Crypto-assets and Stablecoins
USDF Consortium™ Launches to Enable Banks to Mint USDF Stablecoins
USDF Consortium™ Launches to Enable Banks to Mint USDF Stablecoins
The USDF Consortium, an association of FDIC-insured financial institutions, launched, with a mission to build a network of banks to further the adoption and interoperability of a bank-minted USDF stablecoin. USDF will be minted exclusively by U.S. banks and will be redeemable on a 1:1 basis for cash from a Consortium member bank. The Consortium's founding bank members include New York Community Bank, NBH Bank, FirstBank, Sterling National Bank, and Synovus Bank.
#Fintech#CryptoAssets#Stablecoins#UnitedStates#DFC
·prnewswire.com·
USDF Consortium™ Launches to Enable Banks to Mint USDF Stablecoins
FDIC-Backed Banks Send Stablecoins in USDF First
FDIC-Backed Banks Send Stablecoins in USDF First
NBH Bank and New York Community Bank have conducted the first USDF transaction over the Provenance Blockchain. NBH Bank minted the newly introduced stablecoin and sent it to a customer of New York Community Bank as part of a test run. USDF is a stablecoin offered by the USDF Consortium, a group of FDIC-backed banks that announced its formation last week.
#Fintech#CryptoAssets#Stablecoins#DFC
·coindesk.com·
FDIC-Backed Banks Send Stablecoins in USDF First
5 Reasons Why You Should Buy Terra
5 Reasons Why You Should Buy Terra
"Terra is a layer-1 blockchain platform that supports smart contracts and enables the creation of various stablecoins. It aims to serve as a base layer for the fintech ecosystem. These stablecoins are stabilised by algorithms and are used for payment purposes. They run on a seigniorage mechanism."
#Fintech#CryptoAssets#Stablecoins#Terra#DFC
·coinjournal.net·
5 Reasons Why You Should Buy Terra
Mark Zuckerberg Stablecoin Project Diem Considers Selling Off Remaining Assets
Mark Zuckerberg Stablecoin Project Diem Considers Selling Off Remaining Assets
The Meta Platform-backed Diem Association is reportedly weighing a sale of its assets as a way to return capital to its investor members. Diem is in discussions with investment bankers about how best to sell its intellectual property and find a new home for the engineers who developed the technology, cashing out whatever value remains in its once-ambitious Diem coin venture. The Association struck an arrangement with Silvergate Capital to issue Diem, but resistance from the U.S. Fed apparently dealt the effort a final blow.
#Fintech#CryptoAssets#Stablecoins#Facebook#DFC
·bloomberg.com·
Mark Zuckerberg Stablecoin Project Diem Considers Selling Off Remaining Assets
Mobile-First Blockchain Celo Launches Stablecoin Tied to Brazilian Real
Mobile-First Blockchain Celo Launches Stablecoin Tied to Brazilian Real
"Phone-focused blockchain Celo launched cREAL, a stablecoin pegged to Brazil's local currency, the real. As of Thursday, cREAL will be available on Brazil-based crypto exchanges Ripio, FlowBTC and NovaDAX. Crypto wallets Bitfy and Coins will also support the stablecoin. NovaDAX users will be able to spend cREAL with the prepaid crypto card issued by the crypto exchange. Bitfy customers will be able to use the cREAL throughout the Cielo network, Brazil's largest credit and debit card operator, the company said in a press release Thursday."
#Fintech#CryptoAssets#Stablecoins#SouthAmerica#DFC
·coindesk.com·
Mobile-First Blockchain Celo Launches Stablecoin Tied to Brazilian Real
Making Money by Gary B. Gorton, Chase P. Ross, Sharon Y. Ross
Making Money by Gary B. Gorton, Chase P. Ross, Sharon Y. Ross
"It is difficult for private agents to produce money that circulates at par with no questions asked. We study two cases of privately-produced money: pre-Civil War U.S. private banknotes and modern stablecoins. Private monies are introduced when there are no better alternatives, but they initially carry an inconvenience yield. Over time, these monies may become more money-like, but they do not always achieve a positive convenience yield. Technology advances and reputation formation pushed private banknotes toward a positive convenience yield. We show that the same forces are at work for stablecoins."
#Fintech#CryptoAssets#Stablecoins#DFC
·papers.ssrn.com·
Making Money by Gary B. Gorton, Chase P. Ross, Sharon Y. Ross
Diem Confirms Shutdown as Silvergate Acquires the Project's Assets
Diem Confirms Shutdown as Silvergate Acquires the Project's Assets
Silvergate Bank confirmed that it's purchasing Diem’s development, deployment and operations tools, as well as tools “for running a blockchain-based payment network” for remittances and other applications. The Diem Association, the stablecoin project from Meta Platforms, will “begin the process of winding down” both the group and its subsidiaries over the next few weeks. Silvergate Bank described Diem’s work as running “in a pre-launch phase.”
#Fintech#CryptoAssets#Stablecoins#Facebook#DFC
·coindesk.com·
Diem Confirms Shutdown as Silvergate Acquires the Project's Assets
Bank that bought assets from Zuckerberg’s Diem plans to launch stablecoin
Bank that bought assets from Zuckerberg’s Diem plans to launch stablecoin
Silvergate Bank confirmed that it's purchasing Diem’s development, deployment and operations tools, as well as tools “for running a blockchain-based payment network” for remittances and other applications. The Diem Association, the stablecoin project from Meta Platforms, will “begin the process of winding down” both the group and its subsidiaries over the next few weeks. Silvergate Bank described Diem’s work as running “in a pre-launch phase.” Silvergate CEO Alan Lane said they hope to launch a stablecoin by the end of this year.
#Fintech#CryptoAssets#Stablecoins#Facebook#Sivergate#DFC
·cnbc.com·
Bank that bought assets from Zuckerberg’s Diem plans to launch stablecoin
Luna Foundation Guard Launches to Support UST Peg
Luna Foundation Guard Launches to Support UST Peg
"The Luna Foundation Guard, a new decentralized organization developed to support the Luna ecosystem, has been launched last week in Singapore. The institution will offer funding in the form of grants to support initiatives built on top of the Luna network. One of its biggest functions will be to establish a “forex reserve” that will aid UST, the companion stablecoin of the Luna ecosystem, to maintain its peg."
#Fintech#CryptoAssets#Stablecoins#Terra#DFC
·news.bitcoin.com·
Luna Foundation Guard Launches to Support UST Peg
The Future of Payments Is Not Stablecoins
The Future of Payments Is Not Stablecoins
A NY Fed blog post argues that stablecoins are unlikely to be the future of payments, but if distributed ledger technology platforms are the transfer mechanism of the future, then tokenized bank deposits might be a fruitful avenue to pursue. One of the reasons given is that, because they are fractionally backed by reserves, tokenized deposits wouldn't lock up liquidity like stablecoins do, plus deposits support bank lending to the real economy and the transmission of monetary policy.
#Fintech#CryptoAssets#Stablecoins#UnitedStates#DFC
·libertystreeteconomics.newyorkfed.org·
The Future of Payments Is Not Stablecoins
Why stablecoins should not be regulated like Western Union
Why stablecoins should not be regulated like Western Union
So how are stablecoins being regulated in the U.S? One of the many frameworks that has been adopted is existing state-based money transmitter law. The biggest stablecoin – USD Coin – is issued by Circle Internet, a company that is licensed by around 40 different states to transmit money. Oddly, this is the same regulatory framework that applies to old school remittance companies like Western Union. If you've never made a remittance before, here's how it works. A retail customers temporarily hand over a small amount of money, say $200, to a Western Union agent. The agent contacts a foreign Western Union office and tells them to provide cash to the customer's friend or relative. In the early 2000s this money transmitter framework was expanded to cover the likes of PayPal. Whereas Western Union keep customer funds for an hour or two, tops overnight, customers of PayPal keep balances in their wallet for months, even years. This storage function means that PayPal is doing something quite different than Western Union.
#Fintech#CryptoAssets#Stablecoins#DFC
·jpkoning.blogspot.com·
Why stablecoins should not be regulated like Western Union
Japan's Biggest Bank to Issue Yen-Pegged Stablecoin for Settlement: Report
Japan's Biggest Bank to Issue Yen-Pegged Stablecoin for Settlement: Report
Mitsubishi UFJ Trust hopes to bring about instant settlement of securities transactions by using blockchain for trading and a Japanese yen-pegged stablecoin for payment. It will be similar to JPM Coin by JPMorgan, which is focused on speeding up wholesale payments such as bond transactions. Mitsubishi UFJ is looking to make settlements instantaneous, versus the couple of days it now takes.
#Fintech#CryptoAssets#Stablecoins#Settlement#Japan#DFC
·coindesk.com·
Japan's Biggest Bank to Issue Yen-Pegged Stablecoin for Settlement: Report
House Hearing Addresses Stablecoins and Regulation, Consensus May Emerge on Legislation
House Hearing Addresses Stablecoins and Regulation, Consensus May Emerge on Legislation
"Earlier this week, the House Committee on Financial Services held a hearing on stablecoins or digital assets tied to fiat currency. The Hearing was driven by the recent report by the President’s Working Group (PWG) on Financial Markets. While stablecoins are not (yet) systemically worrisome, the market has grown to $174 billion in market capitalization. Stablecoins currently represent more than 75% of trading on all digital asset trading platforms."
#Fintech#CryptoAssets#Stablecoins#UnitedStates#DFC
·crowdfundinsider.com·
House Hearing Addresses Stablecoins and Regulation, Consensus May Emerge on Legislation
Assessment of Risks to Financial Stability from Crypto-assets
Assessment of Risks to Financial Stability from Crypto-assets
The Financial Stability Board (FSB) published an examination of developments and associated vulnerabilities relating to unbacked crypto-assets, stablecoins; and decentralised finance (DeFi) and other platforms on which crypto-assets trade. The report notes that although the extent and nature of use of crypto-assets varies across jurisdictions, financial stability risks could rapidly escalate, underscoring the need for timely and pre-emptive evaluation of possible policy responses.
#Fintech#CryptoAssets#Stablecoins#DeFi#DFC
·fsb.org·
Assessment of Risks to Financial Stability from Crypto-assets
Wyoming Lawmakers Want State to Launch Its Own Stablecoin
Wyoming Lawmakers Want State to Launch Its Own Stablecoin
Wyoming lawmakers have proposed the Wyoming Stable Token Act (SF0106), which paves the way for the crypto-friendly state to launch its own dollar-pegged token. The act would allow Wyoming treasurer Curtis Meier Jr. to create a state stablecoin pegged to the U.S. dollar. The token would be redeemable for a single dollar held in trust by the state.
#Fintech#CryptoAssets#Stablecoins#UnitedStates#Wyoming#DFC
·decrypt.co·
Wyoming Lawmakers Want State to Launch Its Own Stablecoin
Avanti Is Now Custodia, Announces Countdown to Launch in Q2
Avanti Is Now Custodia, Announces Countdown to Launch in Q2
Wyoming-based Avanti Financial Group has changed its name to Custodia Bank, and announced plans to launch in Q2 with U.S. dollar deposit accounts for business customers, initially providing ACH and Fedwire services. Its post-launch roadmap includes digital asset custody, Avit™ (a payment instrument akin to a digital cashier’s check) and prime services, facilitated by customer-facing APIs to enable the programmability of payments by customers.
#Fintech#CryptoAssets#Stablecoins#Wyoming#Avanti#Custodia#DFC
·custodiabank.com·
Avanti Is Now Custodia, Announces Countdown to Launch in Q2
Tracing the footprint of cryptoisation in emerging market economies
Tracing the footprint of cryptoisation in emerging market economies
A new Bank for International Settlements (BIS) note provides estimates of the extent of "cryptoization" in emerging market economies (EMEs). In countries with volatile and/or depreciating exchange rates, holders of domestic fiat currencies have incentives to shift into reserve currency-pegged stablecoins, which conveniently help avoid capital controls and financial integrity requirements. The BIS note found that trading of US dollar-linked stablecoins vis-à-vis some EME currencies has soared since 2020, particularly against the Turkish lira and the Brazilian real. In addition, trading of risky crypto-assets, such as Bitcoin, also spiked in some EMEs facing depreciation pressure.
#Fintech#CryptoAssets#Stablecoins#CrossBorder#DFC
·bis.org·
Tracing the footprint of cryptoisation in emerging market economies
The emerging autonomy-stability choice for stablecoins
The emerging autonomy-stability choice for stablecoins
This paper by Maarten van Oordt illustrates how fiat-backed/pegged stablecoin peg deviations may occur when the issuer doesn't have reliable access to the traditional payment system of the jurisdiction that issues the relevant fiat currency. It suggests that national authorities could make stablecoin issuer access to payment systems conditional on submitting to regulatory controls. Stablecoin users would then face a choice between regulated stablecoins with a stable value but little autonomy, and alternative stablecoin arrangements with more autonomy but a less stable value.
#Fintech#CryptoAssets#Stablecoins#DFC
·research.vu.nl·
The emerging autonomy-stability choice for stablecoins
Why Stablecoin Interest Rates Are So Damn High
Why Stablecoin Interest Rates Are So Damn High
"Why are interest rates on dollar-pegged stablecoins so much higher than interest rates on actual dollars? You’d think that a stablecoin worth a dollar would command the same interest rate as a dollar, namely zero. But a quick search of lending rates on stablecoins reveals rates of anything from 9% to 13%, or even more."
#Fintech#CryptoAssets#Stablecoins#DFC
·coindesk.com·
Why Stablecoin Interest Rates Are So Damn High
USDF Stablecoin Consortium Adds 3 More Banks
USDF Stablecoin Consortium Adds 3 More Banks
"Amerant Bank, ConnectOne Bank and Primis Bank have joined founding members New York Community Bank, Synovus Bank, NBH Bank, First Bank and Webster Bank in the USDF Consortium, the group said in a statement Wednesday. Investment bank Piper Sandler will offer guidance through the process as the consortium grows."
#Fintech#CryptoAssets#Stablecoins#USDF#DFC
·coindesk.com·
USDF Stablecoin Consortium Adds 3 More Banks
Facebook Libra: the inside story of how the company’s cryptocurrency dream died
Facebook Libra: the inside story of how the company’s cryptocurrency dream died
"What emerges is a picture of Silicon Valley executives who thought they could charge into finance and make billions, if only they could surmount technical and regulatory barriers. What they failed to realise was that the very fact Facebook had conceived the idea, doomed it. As one government official involved in the process puts it: “Diem spent years trying to reverse engineer their project to fix all of its faults. But they could never fix being linked to Facebook. It was their original sin.”"
#Fintech#CryptoAssets#Stablecoins#Facebook#Regulation#UnitedStates#DFC
·ft.com·
Facebook Libra: the inside story of how the company’s cryptocurrency dream died