Stablecoins: regulatory responses to their promise of stability

Stablecoins are gaining traction in the mainstream financial sector, presenting both opportunities and challenges. They hold the promise to mirror the value of fiat currencies but consistently achieving value parity remains a challenge.

As the stablecoin market continues to evolve in its quest to offer a means of payment, national and international regulatory bodies are responding to these developments by implementing a comprehensive suite of measures aimed at mitigating the risks associated with stablecoin issuance. These measures span critical areas, including licensing, reserve asset management, redemption rights, capital adequacy, consumer protection, governance and risk management, cyber security and anti-money laundering (AML)/countering the financing of terrorism (CFT) compliance.

This paper 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.

JEL classification: E42, G18, G23, G28, O30, O38

Keywords: stablecoins, fintech, regulation, digital payment services, cryptoassets, digital assets