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Proposed UK regulatory regime for systemic payment systems using stablecoins
Proposed UK regulatory regime for systemic payment systems using stablecoins
The Bank of England (BoE) published a discussion paper that sets out its proposed regulatory framework for systemic payment systems using sterling-denominated stablecoins and related service providers. It was published alongside a discussion paper from the Financial Conduct Authority (FCA) on their regulatory approach to stablecoin issuers and custodians, a letter from the Prudential Regulation Authority (PRA) to bank Chief Executive Officers on innovations in the use by banks of deposits, e-money and stablecoins, and a roadmap paper, which sets out how the various regimes interact together. Notably, the BoE discussion paper favors stablecoins fully backed by unremunerated central bank deposits as the most appropriate for systemic payment systems using stablecoins.
#Fintech#Stablecoins#CryptoAssets#UnitedKingdom#RegTech#DFC
·bankofengland.co.uk·
Proposed UK regulatory regime for systemic payment systems using stablecoins
Will the real stablecoin please stand up?
Will the real stablecoin please stand up?
The Bank for International Settlements (BIS) published a paper that provides an overview of the evolution of the stablecoin market and examines whether stablecoins are actually “stable”. It studies 68 stablecoins and shows that none of them have been able to maintain parity with their pegs at all times. Moreover, it argues that there is currently no guarantee that stablecoin issuers could redeem users’ stablecoins in full and on demand. For these reasons, it concludes that the current crop of stablecoins don’t meet the key criteria for being a safe store of value and a trustworthy means of payment in the real economy. The paper also highlights some significant data gaps.
#Fintech#CryptoAssets#Stablecoins#BIS#DFC
·bis.org·
Will the real stablecoin please stand up?
EU Unveils Capital Requirements for Stablecoin Issuers
EU Unveils Capital Requirements for Stablecoin Issuers
The European Banking Authority (EBA) launched consultations on draft stablecoin regulatory requirements. Smaller stablecoins must hold at least 30% of their reserves at commercial banks (for significant stablecoins it’s 60%). (A significant stablecoin is one with at least €5 billion in reserves or more than ten million users.) Also, no more than 10% can be held at one bank (5% if the bank is a small one), and deposits from a single stablecoin can’t make up more than 2.5% of a bank’s assets. There are also rules on the maturity of assets. Plus there are requirements for non cash liquid assets (government, local or quasi-government debt) and restrictions on the maximum exposure to a single issuer. https://www.ledgerinsights.com/eu-stablecoin-reserves-consultation/
#Fintech#CryptoAssets#Stablecoins#Regulation#Europe#DFC
·financemagnates.com·
EU Unveils Capital Requirements for Stablecoin Issuers
Large fiat-backed stablecoins depegged 600+ times in 2023
Large fiat-backed stablecoins depegged 600+ times in 2023
There have been 609 depegs among large cap fiat-backed stablecoins so far this year, according to Moody’s Analytics. Depegs are defined by the price of stablecoins fluctuating by more than three percent in a day against their fiat currency peg. Among a total of 1,914 depegs up to mid-September 2023, large cap stablecoins represented 609 depegs. By comparison, in 2022, there were 707 large cap depegs (including the top five stablecoins by market cap, including Ethereum blockchain’s DAI) and a total of 2,847 depegs.
#Fintech#CryptoAssets#Stablecoins#Moodys#DFC
·moodysanalytics.com·
Large fiat-backed stablecoins depegged 600+ times in 2023
Fnality adds Goldman, BNP Paribas, DTCC in $95m funding round
Fnality adds Goldman, BNP Paribas, DTCC in $95m funding round
Goldman Sachs, BNP Paribas and DTCC joined Fnality's £77.7 million Series B funding round. Formerly called Utility Settlement Coin, Fnality plans to offer a wholesale payment and settlement platform using stablecoins backed by deposits at central banks. So far it's operational only in the U.K., where banks can transfer money from their Bank of England accounts to the Fnality UK central bank account where it’s tokenized. Because the money is tokenized it enables instant atomic securities transaction settlement. One of the intended use cases is cross currency payments, but that will need the cooperation of other central banks, which has been slow in coming. https://www.fnality.org/news-views/fnality-international-raises-77.7m-in-series-b-funding-round
#Fintech#Blockchain#Stablecoins#Fnality#Settlement#DFC
·ledgerinsights.com·
Fnality adds Goldman, BNP Paribas, DTCC in $95m funding round
IOSCO publishes crypto markets policy recommendations
IOSCO publishes crypto markets policy recommendations
The International Organization of Securities Commissions (IOSCO) published its conclusive report containing policy suggestions for crypto-asset and digital asset markets, after a consultation period that started in May 2023. The recommendations aim to help establish a coordinated global regulatory response to the risks posed by crypto-asset service providers (CASPs), including market abuse, conflict of interest, client asset protection and disclosures. The regulatory approach taken is consistent with IOSCO’s principles and associated standards for securities markets regulation, and IOSCO denied crypto industry requests for a bespoke regime for stablecoins. https://www.iosco.org/library/pubdocs/pdf/IOSCOPD747.pdf
#Fintech#CryptoAssets#Stablecoins#IOSCO#Regulation#DFC
·coindesk.com·
IOSCO publishes crypto markets policy recommendations
On par: A Money View of stablecoins
On par: A Money View of stablecoins
"This paper presents a money view analysis of the recent crypto innovation of stablecoins, which have seen a remarkable rise and more recently some spectacular collapses. By analogizing on-chain with offshore, and developing an extended analogy of stablecoins with Eurodollars, we reveal the primitive character of the existing on-chain liquidity mechanism which supports the promise of par settlement by existing on-chain stablecoin models. Liquidity, not solvency, is the issue confronted by par settlement."
#Fintech#CryptoAssets#Stablecoins#BIS#DFC
·bis.org·
On par: A Money View of stablecoins
Circle launches ‘bridged USDC standard’ for deploying to new networks
Circle launches ‘bridged USDC standard’ for deploying to new networks
Circle has introduced a new standard to streamline the process of launching its USDC stablecoin. The new “bridged USDC standard” allows developers to launch the token through a two-phase process. In the first phase, the third-party developer has control of the token contracts, and the token on the new network is backed by a native version on another network. In the second phase, Circle takes control of the contracts, and the token becomes backed directly by Circle’s reserves. The second phase may not occur with all deployments. https://www.circle.com/blog/bridged-usdc-standard
#Fintech#CryptoAssets#Stablecoins#Circle#USDC#DFC
·cointelegraph.com·
Circle launches ‘bridged USDC standard’ for deploying to new networks
Stablecoin proof of reserves proposals seek more details
Stablecoin proof of reserves proposals seek more details
The American Institute of Certified Public Accountants (AICPA) published proposed criteria for stablecoin issuers when they disclose their proof of reserves. It asks for more details than any stablecoin issuers currently provide in their disclosures. For example, the call for issuers to disclose the banks where they hold cash, the amount of redeemable stablecoins on each blockchain, and details about tokens that are not redeemable, either temporarily or permanently (e.g., pre-minted or blacklisted tokens). Plus proof of reserves will need to disclose the conditions required to redeem the stablecoin directly. https://www.aicpa-cima.com/news/article/aicpa-debuts-proposed-reporting-framework-for-issuers-of-stablecoins
#Fintech#CryptoAssets#Stablecoins#Accounting#Reporting#UnitedStates#DFC
·ledgerinsights.com·
Stablecoin proof of reserves proposals seek more details
State of Stablecoins: Signs of Returning Liquidity
State of Stablecoins: Signs of Returning Liquidity
Coin Metrics published an update on stablecoin market developments, concluding that the expanding supply of stablecoins serves as a clear indicator of rising activity and usage within the digital asset ecosystem, with Tether on Tron leading the charge. Despite challenges in the U.S. regulatory environment and a complex political landscape, stablecoin liquidity has shown impressive resilience. The update attributes this to the wide utility of stablecoins, through avenues such as decentralized finance (DeFi) pools to exchanges and in diverse yield generating products. These trends also evidence the central role stablecoins play in the crypto-economy.
#Fintech#CryptoAssets#Stablecoins#DFC
·coinmetrics.substack.com·
State of Stablecoins: Signs of Returning Liquidity
Coinbase rolls out crypto transfers via links sent on WhatsApp, Telegram
Coinbase rolls out crypto transfers via links sent on WhatsApp, Telegram
Coinbase Wallet now allows for the transfer of crypto through a link that can be sent through popular social media sites and messaging apps apps like iMessage, Telegram, WhatsApp, Facebook, Instagram and TikTok. And there are no payment fee when sending USD Coin (USDC). Clicking the link will take the recipient to their device’s app store to download Coinbase Wallet — if not already downloaded — where they can create a wallet in one click. If the funds aren’t claimed within two weeks, they will be returned to the sender. There appear to be no transaction-size limits. https://www.coinbase.com/blog/with-coinbase-wallet-sending-money-is-now-as-easy-as-sending-a-text
#CryptoAssets#Fintech#Coinbase#Stablecoins#USDC#CrossBorder#DFC
·cointelegraph.com·
Coinbase rolls out crypto transfers via links sent on WhatsApp, Telegram
Basel Committee to consult on bank treatment of crypto
Basel Committee to consult on bank treatment of crypto
The Basel Committee on Banking Supervision reviewed various elements of the prudential standard for bank exposures to crypto-assets published in December 2022. It agreed to consult on potential targeted revisions related to the criteria for stablecoins to receive a preferential "Group 1b" regulatory treatment. The Committee will also consult on various technical amendments to help promote a consistent understanding of the standard. The Committee concluded that crypto-assets that use permissionless blockchains create risks that cannot be sufficiently mitigated at present and therefore agreed to retain the existing "Group 2" treatment for them (1,250% risk weight). A consultation paper will be published before end-2023. https://www.bis.org/press/p231207.htm
#Fintech#CryptoAssets#Stablecoins#Regulation#Basel#BIS#DFC
·ledgerinsights.com·
Basel Committee to consult on bank treatment of crypto
Stablecoin Standard
Stablecoin Standard
"Stablecoin Standard is the industry body for stablecoin issuers globally. Our objective is to give the industry a shared voice, and engage with external stakeholders to promote the acceptance of stablecoins through education, resources, shared initiatives and the StableCheck™️ scheme. "
#Fintech#CryptoAssets#Stablecoins#DFC
·stablecoinstandard.com·
Stablecoin Standard
Tether Introduces New Policy to Strengthen Ecosystem Security
Tether Introduces New Policy to Strengthen Ecosystem Security
Stablecoin issuer Tether initiated a new voluntary wallet-freezing policy designed to combat activity connected with Sanctioned persons on the Office of Foreign Assets Control (OFAC) Specially Designated Nationals (SDN) List. This adds to the Sanctions controls Tether already enforces for wallets on its platform. Tether has taken additional precautionary measures, including freezing wallets previously added to the SDN List. "The primary objective behind this approach is to proactively prevent any potential misuse of Tether tokens and enhance security measures."
#Fintech#CryptoAssets#Stablecoins#Tether#FinancialIntegrity#DFC
·tether.to·
Tether Introduces New Policy to Strengthen Ecosystem Security
S&P Global Ratings Launches Stablecoin Stability Assessment
S&P Global Ratings Launches Stablecoin Stability Assessment
S&P Global unveiled ratings for eight stablecoins. On a grading scale of one (very strong) to five (very weak) USDC, Pax Dollar (USDP) and Gemini Dollar (GUSD) scored all scored two strong), while Tether's USDT scored a four (constrained). USDT was penalized for its lack of transparency and for holding some higher risk assets. The ratings are based on an assessment of asset quality risks, including credit, market value, and custody risks, the degree of any risk mitigants like overcollateralization requirements and liquidation mechanisms, governance, legal and regulatory framework, redeemability and liquidity, technology and third-party dependencies, and track record.
#Fintech#CryptoAssets#Stablecoins#Ratings#USDC#USDT#GUSD#USDP#DFC
·press.spglobal.com·
S&P Global Ratings Launches Stablecoin Stability Assessment
Basel Committee consults on bank stablecoin exposure standards
Basel Committee consults on bank stablecoin exposure standards
The Basel Committee on Banking Supervision is proposing revisions to various elements of the prudential standard for bank exposures to crypto-assets published in December 2022. They flesh out the criteria on the composition of the reserve assets that back stablecoins, to be eligible for inclusion in the Group 1b category of crypto-assets, and thus benefit from a preferential regulatory treatment. For example, reserve assets should be comprised of central bank reserves, short-term marketable securities guaranteed by sovereigns and central banks with high credit quality, and short-term deposits at high credit quality banks. If longer-term assets are allowed, the issuer would have to overcollateralize the stablecoin holder claims.
#Fintech#CryptoAssets#Stablecoins#Regulation#Basel#BIS#DFC
·bis.org·
Basel Committee consults on bank stablecoin exposure standards
Hong Kong proposes licensing for fiat-referenced stablecoins
Hong Kong proposes licensing for fiat-referenced stablecoins
The Financial Services and the Treasury Bureau and Hong Kong Monetary Authority (HKMA) published a consultation paper outlining their proposal to regulate fiat-referenced stablecoins within the region. Firms actively marketing the issuance of such stablecoins to the public in Hong Kong will be required to obtain a specific local license from the HKMA. Such issuers will have to ensure that the value of the high-quality highly-liquid reserve assets backing the stablecoins is at least equal to the par value of the stablecoins in circulation at all times, to ensure that users will be able to redeem them for fiat currency on demand. https://www.hkma.gov.hk/eng/news-and-media/insight/2023/12/20231227/
#Fintech#CryptoAssets#Stablecoins#Regulation#HongKong#DFC
·cryptopolitan.com·
Hong Kong proposes licensing for fiat-referenced stablecoins
Tether’s Ascent: Breaking Down the Dominant Stablecoin's Growth
Tether’s Ascent: Breaking Down the Dominant Stablecoin's Growth
"In this week’s issue of Coin Metrics’ State of the Network, we delve into Tether’s remarkable ascent, exploring its primary avenues of growth, adoption, the nature of its usage and reserve holdings to gain a holistic understanding of the stablecoin juggernaut through on-chain data."
#Fintech#CryptoAssets#Stablecoins#Tether#DFC
·coinmetrics.substack.com·
Tether’s Ascent: Breaking Down the Dominant Stablecoin's Growth
Public information and stablecoin runs
Public information and stablecoin runs

The Bank for International Settlements (BIS) published a paper on how the promise of par convertibility by various types of stablecoins breaks down. Public information disclosure has an ambiguous effect on run risk. Transparency can lead to greater run risk when market expectations are pessimistic or when transacting in and out of the coins is easy (e.g., USDC). Conversely, transparency strengthens a stablecoin peg when priors are strong and conversion is costly. The paper doesn't say it, but presumably costly conversion strengthens the peg even if transparency is weak (e.g., as USDT was until recently)?

#Fintech#CryptoAssets#Stablecoins#BIS#USDC#USDT#DFC
·bis.org·
Public information and stablecoin runs
Russia advances law to use tokenized digital assets for payments
Russia advances law to use tokenized digital assets for payments
The Russian State Duma will consider a draft law on February 27, 2024, that will legalize the use of tokenized assets for cross border payments. Russia already has a legal framework for tokenized financial assets, which it refers to as digital financial assets (DFA). These regulated assets include tokenized commodities, trade finance and other structured products. However, DFAs were explicitly not allowed to be used for payments. However, Russia is now looking for alternative ways to settle cross border transactions, in light of sanctions imposed following Russia's invasion of Ukraine.
#Fintech#CryptoAssets#Stablecoins#Tokenization#CrossBorder#Payments#Russia#DFC
·ledgerinsights.com·
Russia advances law to use tokenized digital assets for payments
Primary and Secondary Markets for Stablecoins
Primary and Secondary Markets for Stablecoins
The U.S. Federal Reserve (Fed) published a paper that explored the March 2023 USDC stablecoin depeg as a means to learn more about the complexities of stablecoin markets, with an emphasis on distinguishing between primary and secondary market dynamics during a stablecoin crisis. In the end, the analysis, which compared the market dynamics of the four largest stablecoins by market capitalization (USDT, USDC, BUSD and DAI), found more questions than answers, and called for additional theoretical and empirical investigation.
#Fintech#CryptoAssets#Stablecoins#USDC#USDT#BUSD#DAI#DFC
·federalreserve.gov·
Primary and Secondary Markets for Stablecoins
HKMA launches stablecoin issuer sandbox
HKMA launches stablecoin issuer sandbox
The Hong Kong Monetary Authority (HKMA) launched its stablecoin issuer sandbox. Tying in with the consultation on the legislative proposal for implementing the regulatory regime for stablecoin issuers, the HKMA wishes to leverage the sandbox arrangement to communicate supervisory expectations to parties interested in issuing fiat-referenced stablecoins in Hong Kong, as well as to obtain feedback from participants on the proposed regulatory requirements. The list of participants of the sandbox arrangement will be available on the HKMA website. https://www.hkma.gov.hk/eng/news-and-media/press-releases/2022/01/20220112-3/
#Fintech#CryptoAssets#Stablecoins#Regulation#Sandboxes#HongKong#DFC
·hkma.gov.hk·
HKMA launches stablecoin issuer sandbox
EBA launches consultation on stablecoin redemption guidelines
EBA launches consultation on stablecoin redemption guidelines
The European Banking Authority (EBA) has initiated a consultation on the guidelines for the orderly redemption of asset-referenced or e-money tokens in the event that the issuer fails to fulfil its obligations under the Markets in Crypto assets Regulation (MiCAR). For example, the draft guideline calls for the clarification of the main principles governing the redemption and distribution plan, such as the equitable treatment of token holders, and describe the main steps for the orderly and timely implementation of the plan.
#Fintech#CryptoAssets#Stablecoins#Regulation#Europe#DFC
·eba.europa.eu·
EBA launches consultation on stablecoin redemption guidelines
Payment Stablecoins for Real-time Gross Settlements
Payment Stablecoins for Real-time Gross Settlements
Payment stablecoins, a type of stablecoin fully backed by high quality and liquid assets, are used proportionally less in crypto trading than fiat dollars are used in the trading of traditional assets. The adoption of digital token money such as payment stablecoins for general use in real-time gross settlement (RTGS) could potentially mitigate risks associated with concentration and liquidity in the current payment systems. Greater integration of payment stablecoins with fiat payment rails, through appropriate regulation and limited access to central bank accounts, can preserve the singleness of money and mitigate against financial stability concerns. (Gordon Liao, Circle)
#Fintech#CryptoAssets#Stablecoins#Circle#DFC
·papers.ssrn.com·
Payment Stablecoins for Real-time Gross Settlements
Custodia Bank Loses Lawsuit Challenging Fed Rejection of Master Account Application
Custodia Bank Loses Lawsuit Challenging Fed Rejection of Master Account Application
A federal judge has rejected Wyoming-based Custodia Bank's argument that it is entitled to a Federal Reserve master account and membership with the Fed. Judge Scott Skavdahl, of District of Wyoming, denied Custodia's motion for judgement on, writing that federal laws do not require the nation's central bank to give every eligible depository institution access to its master account system, nor did the provided evidence suggest that the Federal Reserve Board of Governors influence a regional branch of the Fed to deny its application for an account. Custodia is now "reviewing the Court’s decision and all of [its] options, including appeal".
#Fintech#Custodia#Stablecoins#Regulation#UnitedStates#FRB#DFC
·coindesk.com·
Custodia Bank Loses Lawsuit Challenging Fed Rejection of Master Account Application
Ripple to launch USD-backed stablecoin on Ethereum and XRP Ledger
Ripple to launch USD-backed stablecoin on Ethereum and XRP Ledger
Ripple plans to launch a stablecoin pegged to the U.S. dollar across the Ethereum and XRP Ledger blockchains. They will be fully backed by U.S. dollar deposits, short-term U.S. government treasuries, and “other cash equivalents. Ripple will provide monthly attestations of its holdings that back the stablecoin, which will be audited by a third-party accounting firm. It is expected to be available later this year, subject to applicable regulatory approval.
#Fintech#CryptoAssets#Stablecoins#Ripple#DFC
·ripple.com·
Ripple to launch USD-backed stablecoin on Ethereum and XRP Ledger
Stablecoins: regulatory responses to their promise of stability
Stablecoins: regulatory responses to their promise of stability
The Bank for International Settlements (BIS) published a paper that assesses the evolving regulatory landscape for issuers of single fiat-pegged stablecoins. It compares regulatory frameworks issued by 11 authorities in seven jurisdictions to identify emerging trends and commonalities in their respective frameworks. It finds that many regulatory approaches have similar key requirements, but there are relevant differences in regulatory regimes. For example, in-scope stablecoin definitions vary significantly across regulations, and there are notable differences in the specifics of the regulatory treatment of reserves, and in relation to segregation and custody.
#Fintech#CryptoAssets#Stablecoins#Regulation#BIS#DFC
·bis.org·
Stablecoins: regulatory responses to their promise of stability
Common Knowledge Theory of Stablecoins
Common Knowledge Theory of Stablecoins
"We propose a new theory of stablecoins based on common knowledge. We contrast this with the ‘better money’ theory of stablecoins, which emphasises marginal improvements over the standard origin of money theory as: medium of exchange, unit of account, store of value."
#Fintech#CryptoAssets#Stablecoins#Money#DFC
·papers.ssrn.com·
Common Knowledge Theory of Stablecoins
Tether Tokens (USD₮ and XAU₮) Launch on The Open Network (TON)
Tether Tokens (USD₮ and XAU₮) Launch on The Open Network (TON)

Tether launches USDT on TON Network, Telegram Wallet Tether's US dollar-pegged USDT and gold-pegged XAUT tokens have launched on The Open Network (TON), facilitating peer-to-peer (P2P) cross-border payments via Telegram’s Wallet app among over 900 million global users. TON is a blockchain network that Telegram started to develop in 2018, but they open-sourced it in 2020 after the U.S. Securities and Exchange Commission (SEC) charged the firm with violating federal securities laws.

#Fintech#CryptoAssets#Stablecoins#Tether#TON#Telegram#Payments#CrossBorder#DFC
·tether.io·
Tether Tokens (USD₮ and XAU₮) Launch on The Open Network (TON)