Developing the regulatory ecosystem: The evolution of stablecoin

Min-Si Wang

Contents

Foreword

Preface

Preface

Introduction: Suptech/regtech defined: Payments, sandboxes and beyond

1.

The uncertain prudential treatment of cryptoassets

2.

US regulatory certainty versus uncertainty for crypto and blockchain

3.

Bermuda: Suptech and regtech supporting the risk-based approach

4.

Suptech: A new era of supervisory philosophy

5.

Cloud computing in the financial sector: A global perspective

6.

DeFi protocol risks: The paradox of cryptofinance

7.

IT transformation in the Prudential Authority of South Africa: A case study

8.

Making the vision a reality: Perspectives from the Monetary Authority of Singapore

9.

Lessons from Hong Kong through the lens of the HKMA

10.

Technological change: Is it different this time?

11.

The ECB’s suptech innovation house: Paving the way for digital transformation of banking supervision

12.

China’s financing opening up and regulatory convergence with the world

13.

Disclosures and market discipline: The promise of regtech

14.

Regtech and new derivatives developments

15.

Fintech and regtech: Leading the evolution and regulation of alternative investments

16.

The role of artificial intelligence and big data in investment management

17.

The promise and challenges of machine learning in finance

18.

Data privacy and alternative data

19.

Digital ID and financial inclusion

20.

Strategic technology: Regulation and innovation of CBDCs

21.

Regulatory sandboxes: Innovation and financial inclusion

22.

Technology and sandbox development innovation in a transitional market: A case study

23.

Developing the regulatory ecosystem: The evolution of stablecoin

24.

Central bank digital currency, regtech and suptech

25.

Digital dollar: Cryptocurrency for everyday commerce

26.

CFTC regtech implications for virtual currency trading

27.

Fintech, regtech, suptech and central bank decision making

Stablecoins were created to solve the fundamental problem of high volatility and convertibility between fiat and digital assets. Stablecoin is a digital asset that represents a constant 1:1 value with a fiat currency such as the dollar or euro. As blockchain-based assets, stablecoin enables fast transactions and has become a staple trading tool for cryptocurrency traders. Stablecoin circulation has grown exponentially with the rapid growth of the crypto market since its inception in 2014. By February 2021, over US$40 billion of market capitalisation in stablecoins were in circulation (see Figure 23.1).

Regulation in this area is developing rapidly. While there are to date no unified stablecoin regulations, the rapid adoption of the technology has spurred government agencies such as the Financial Crimes Enforcement Network (FinCEN) and the Office of the Comptroller of the Currency (OCC) in the US to provide guidance that stablecoin providers can use to model their internal practices. In fact, many stablecoin providers have already started down the road of self-regulation by actively providing comments to the regulatory agencies and following existing regulations around money

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