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🌏 | U.S. regulators to discuss stable coins on 19th = Treasury Secretary


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U.S. regulators to discuss stable coins on 19th = Treasury Secretary

 
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"If stable coins play a major role as a means of payment, we need a proper regulatory framework," Federal Reserve Chairman Powell said in a parliamentary testimony this week.
 

[Reuters] – The US Presidential Advisory Board (PWG), which is made up of top US financial regulators, will open on the XNUMXth of the week ... → Continue reading

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Stable coin

Stable coin(British: Stablecoins) Means that the price isCryptocurrency,Fiat currency, Or traded in the marketCommodities(Precious metalIt is designed to work with (peg) products such as industrial metals and so-called products.CryptocurrencyIs[1].

Stable coin with collateral

The benefits of backed cryptocurrencies fluctuate in the outside world of cryptocurrenciesAssetIt means that the price will be stable.In other words, with supporting assetsCorrelationBecause there is no financial risk. [2]BitcoinとAltcoinCryptocurrency holders either withdraw from the market itself or evacuate to backed stable coins to evacuate their assets in the event of a major price decline. I am forced to do that.Backing assetsredemptionWith a mechanism tosincerityAssuming that it is managed withArbitrageIt can be said that stable coins are unlikely to fall below the value of the underlying assets.

Stable coins are the same related to their underlying assetsボ ラ テ ィ リ テ ィAnd are affected by risk.If the stable coin is backed by a decentralized method, it is relatively safe, but if it is a central type and there is a specific safe etc., the damage of theft or distrust of the existence of the backing asset in the first place etc. It can lead to clinging. [3]

Commodity collateral

The main features are as follows.

  • Its value is fixed to one or more commodities (commodities) and can be redeemed (more or less) at any time.
  • Payments can also be made by unregulated individuals and regulated financial institutions,
  • The amount of commodities (commodities) used to back up the coin should reflect the circulation and supply of stable coins.

Commodity-backed stable coin holders can redeem stable coins at the same conversion rate as obtaining real assets.The cost of maintaining the stability of stable coins is the cost of storing and protecting commodities.

For example, Digix Gold Token (DGX)[4]and so on.

Legal tender collateral

The value of this type of stable coin is based on the value of currencies belonging to third-party regulated financial institutions, such as fiat currencies.In this case, trust in the custodian of the underlying asset is very important for the price stability of the stable coin.Stable coins backed by fiat currency can be traded on exchanges and redeemed by issuers.The cost of maintaining stable coin stability is the cost of maintaining reserves and the cost of compliance, that is, the cost of maintaining the business infrastructure required by regulators, such as licenses and auditors. Equivalent to.

Cryptocurrencies backed by fiat currencies are the most common, and the first stable coins in history were of this type.The main features are as follows.

  • Its value is fixed in one or more currencies (most commonly US dollars, euros, Swiss francs) at a fixed ratio.
  • Tether uses financial institutions such as banks as depository institutions for the currency used for backing.
  • The amount of currency used to back up stable coins should reflect the circulation and supply of stable coins.

As an example, TrueUSD (TUSD)[5],USD Tether(USDT)[6], USD Coin,diemand so on.

Cryptocurrency collateral

Stable coins backed by cryptocurrencies are secured by other cryptocurrencies.This is conceptually similar to a stable coin backed by fiat currency.However, the major difference between the two designs is that fiat collateral is usuallyBlock chainAlthough it occurs outside, the cryptocurrencies used to back up this type of stable coin are in a more decentralized way.Smart contractIs to be executed on the blockchain using.

The features of stable coins backed by cryptocurrencies are as follows.

  • Its value is secured by another cryptocurrency or cryptocurrency portfolio
  • Price fixing is carried out on the chain via smart contracts,
  • Supply is controlled on the blockchain chain using smart contracts,
  • Price stability is achieved not only by collateral, but also by the introduction of supplementary measures and incentives.

The technical implementation of this type of stable coin is more complex and diverse than the fiat-backed implementation.In particular, the risk of software vulnerabilities due to defects in the implementation code of smart contracts increases.A potential problem with this type of stable coin is the changing value of collateral and its reliance on supplementary measures.Its complexity can hinder its widespread use, as it can be difficult to understand how prices are actually guaranteed.Due to the nature of the highly volatile cryptocurrency market, it is also necessary to maintain very high collateral to ensure stability.

Havven is an example of a current project for this type of stable coin.[7], DAI[8]and so on. There is also one that wraps Bitcoin by BitGo (WBTC).

Seigniorage type (unsecured)

Seigniorage type stable coinsalgorithmControl supply using an approach similar to that of a central bank.Seigniorage-type stable coins are less common than others.[9]

The features of the Seigniorage type stable coin are as follows. [9]

  • Pricing is done on the Chiblock chain,
  • No collateral required to generate coins,
  • Value is controlled by algorithmic supply and demand to stabilize prices.

Criticism

TetherIs the largest stable coin by market capitalization, but faced criticism that it could not provide a reserve audit despite its large-scale issuance.[10]

Social benefits

Bank for International SettlementsHe cited potential benefits as money laundering prevention efforts, operational resilience, customer data protection, financial inclusion, tax compliance, and enhanced cybersecurity. [11]

Source

  1. ^ "Rise of Crypto Market's Quiet Giants Has Big Market Implications" (English). Bloomberg.com (September 2021, 3). 2021/10/22Browse.
  2. ^ "Stable Coin Backed by Circle, Coinbase Draws Most Early Demand" (English). Bloomberg.com (September 2018, 10). 2018/10/22Browse.
  3. ^ "Gold-Pegged Vs. USD-Pegged Cryptocurrencies". Investopedia. 2018/10/27Browse.
  4. ^ Eufemio, Anthony C .; Chng, Kai C .; Djie, Shaun (Jul 2018). “Digix's Whitepaper: The Gold Standard in Crypto-Assets”. Digix's Whitepaper: The Gold Standard in Crypto-Assets: 2. https://github.com/DigixGlobal/digix-press-kit/blob/master/digix-whitepaper.pdf. 
  5. ^ “Why Facebook Chose Stablecoins as Its Path to Crypto”. Bloomberg(July 2019, 1). https://www.bloomberg.com/news/articles/2019-01-27/love-crypto-but-not-its-volatility-meet-stablecoins-quicktake 2019/8/30Browse. 
  6. ^ Tether. “Tether: Fiat currencies on the Bitcoin blockchain”. Tether: Fiat Currencies on the Bitcoin Blockchain: 7. https://tether.to/wp-content/uploads/2016/06/TetherWhitePaper.pdf 2018/10/23Browse.. 
  7. ^ Brooks, Samuel; Jurisevic, Anton; Spain, Michael; Warwick, Kain (2018-06-11). “A decentralized payment network and stablecoin”. A Decentralized Payment Network and Stablecoin V0.8: 6–9. https://havven.io/uploads/havven_whitepaper.pdf. 
  8. ^ "The Dai Stablecoin System". 2018/10/23Browse.
  9. ^ a b Memon (August 2018, 8). “Guide to Stablecoin: Types of Stablecoins & Its Importance". 2018/10/22Browse.
  10. ^ “Without this bitcoin price would collapse”. NewsComAu. https://www.news.com.au/finance/money/investing/without-this-scam-bitcoin-price-would-collapse-fears-grow-over-tether-printing-press-as-auditors-part-ways/news-story/308503ab61f82d320e92847a0b59a23b 2018/6/11Browse. 
  11. ^ G7Working Group on Stablecoins. Committee on Payments and Market Infrastructure. (18 October 2019). "CPMI Papers: Investigating the impact of global stablecoins". Bank of International Settlements website Retrieved 23 January 2021.

 

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