Stablecoin (stablecoin)
Stablecoins are cryptocurrencies whose value is tied to a particular fiat currency (that is, the usual currency - dollar or euro) or physical asset (for example, gold).
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Stablecoins
2024
The Central Bank of the Russian Federation named the main risks of using stablecoins
The Central Bank of the Russian Federation outlined the key risks associated with the use of stablecoins in its analytical report published in July 2024. The regulator stressed that despite the relatively small scale of the release and turnover of stablecoins in the global financial system, their potential impact on financial stability requires close attention.
According to the document "Stablecoins: Experience in Use and Regulation," the main risks of using stablecoins are credit risk, market risk and liquidity risk. The Bank of Russia notes that these risks are especially relevant for unregulated activities in the field of stablecoins.
The report pays special attention to the risk of complete blocking of released stablecoins, which may arise at the initiative of the issuer or in the event of certain events, for example, as a result of sanctions restrictions. This risk is characteristic of the most common centralized stablecoins.
The central bank also points to risks to monetary policy, comparing the effect of using stablecoins with the effect of currency exchange, which is especially pronounced in countries with emerging and emerging markets.
In the field of payments, the main risk of using stablecoins, according to the regulator, is a high susceptibility to failures. This may be due to the loss of financial stability of the issuer, especially in the unregulated area, as well as the implementation of operational risks.
The Bank of Russia draws attention to the risks of illegal activities associated with the use of stablecoins for laundering income, drug trafficking and financing of terrorism. The uncontrolled turnover of stablecoins poses a serious challenge to the global system of countering the legalization of proceeds from crime.
The report also notes the technological risks associated with possible vulnerabilities in smart contracts and blockchain networks that could lead to financial losses and market manipulation.
The regulator emphasizes the need to protect the rights of consumers and investors in the field of stablecoins, pointing out the lack of investment insurance and insufficient transparency of information about issuers and providing stablecoins.
STABLECOINES: EXPERIENCE IN USE AND REGULATION
90% of stablecoin transactions are made by non-real users
About 90% of stablecoin transactions are made by non-real users. This is evidenced by the data of a study published in May 2024 by analysts of the payment system Visa and Allium Labs (specializes in weeding out transactions initiated by bots and large traders and isolating transactions made by real people).
According Bloomberg to this report, of the total volume of transactions worth about $2.2 trillion in April 2024, only $149 billion dollars was received as a result of "ordinary payments," and everything else is operations performed by software robots. Such conclusions, as the agency notes, refute the arguments of supporters of stablecoins that tokens tied to an asset such as the dollar can revolutionize the $150 trillion payment industry.
 | This shows that the development of stablecoins as payment instruments is still at a very early stage, "says Pranav Sood, executive director of the EMEA payment platform Airwallex. - This does not mean that they do not have long-term potential, since I believe that it is. But short- and medium-term attention should be focused on ensuring that existing systems work better. |  |
As the study shows, stablecoins by April 2024 are in the making as the main payment method, but they need to create more efficient infrastructure and convenient solutions to increase the level of real use. The path to the widespread distribution of stablecoins continues to be fraught with difficulties, primarily related to technological implementation and confidence in these digital currencies, experts say.[1]
Developing one of the most popular stablecoins TerraUSD company filed for bankruptcy
On January 21, 2024, Terraform Labs, behind one of TerraUSD's most popular stablecoins, filed for bankruptcy. The corresponding statement was sent to the court of the US state of Delaware. The procedure is carried out in accordance with Chapter 11 of the US Bankruptcy Code, which involves the restructuring of the business and allows the work to continue. Read more here.
2023
The Central Bank took cryptocurrencies and stablecoins in the main areas of development of the Russian financial market until 2026
The Bank of Russia has determined the main directions for the development of the financial market until 2026. The regulator published the corresponding document at the end of October 2023. It talks about cryptocurrencies and stablecoins, among other things. Read more here.
A resident of China was sentenced to 9 months in prison for buying 13 thousand USDT stablecoins
On August 14, 2023, information appeared that the Chinese People's Prosecutor's Office of the Fuzhou City District sentenced a local resident to nine months in prison for buying 13 thousand. stablecoin USDT More. here
Tokenized gold market for the first time exceeded $1 billion
In early April 2023, the global tokenized gold market for the first time in history exceeded $1 billion, as evidenced by CoinGecko statistics.
Tokenized gold is a type of stable coin (stablecoin) whose price is tied to gold, and tokens on the blockchain represent ownership of physical gold, which is managed by the issuer. The two largest gold stablecoins on the market are PAX Gold (PAXG), launched by New York fintech firm Paxos Trust Company, and Tether Gold (XAUT), launched by Tether - the same company behind USDT's $80 billion stablecoin.
According to CoinGecko as of April 5, 2023, the market capitalization of PAXG and XAUT was $523.08 million and $498.52 million, respectively. Another $2.39 million came from the Perth Mint Gold Token (PMGT). Thus, the total volume of the tokenized gold market reached $1.02 billion.
It is noted that the total market capitalization of tokenized gold assets is growing as the price of gold approached its historical maximum. This is explained by concerns about the possible devaluation of the currency in the current macroeconomic situation, high inflation and the global crisis. Against this background, the value of cryptocurrency began to grow. So, on April 5, 2023, the price of Bitcoin (BTC) approached $28.58 thousand, while a month earlier it was $22.44 thousand.
| | The banking crisis and ongoing regulatory measures have upended the structure of the cryptocurrency market. Bitcoin has experienced surprisingly good shocks in the banking sector and growing uncertainty over regulation, rising 70% since the beginning of [2023], far ahead of traditional assets. Gold also rose 8.6% after Silvergate collapsed on March 8, 2023, research firm Kaiko said in a statement.[2] | |
2022: E-Stablecoin cryptocurrency announcement that is tied to electricity
In June 2022, it announced the creation of the first decentralized stablecoin tied to electricity, which is able to transmit energy without connecting to the energy network and at the same time practically free of charge. The project was named Electricity Stablecoin (E-Stablecoin). Read more here.
2021
PayPal announced its stablecoin
In early January 2022, PayPal announced its cryptocurrency. It was called PayPal Coin. The company intends to develop this project in conjunction with regulatory authorities. Read more here.
In Moscow, a bag with $1 million was taken from the stablecoin seller Tether during the transaction
In mid-December 2021, in Moscow, a bag with $1 million was taken from a stablecoin seller during a transaction. The victim turned to the police, and she began a pre-investigation check. Read more here.
In the US, they allowed banks to issue cryptocurrencies tied to ordinary currencies or oil
In early January 2021, the United States allowed banks to issue stablecoins - cryptocurrencies tied to ordinary currencies or physical goods (gold, oil, etc.). The appropriate permission was issued by the Office of the Controller of Money Circulation (OCC), which is part of the US Department of the Treasury.
Thanks to the innovation of US credit organizations, banks can not only launch nodes of public blockchain systems, validate, record and make money transfers that comply with current legislation, but also issue their own stablecoins.
| | The bank can use stablecoins to facilitate payment transactions for customers in an independent nodal verification network, including by issuing stablecoin and exchanging it for fiat currency, the OCC said in a statement. | |
Circle chief Jeremy Alleir stressed the new rules effectively equate public blockchains with SWIFT, automated clearing houses (ACHs) and the FedWire translation network.
At the same time American , the regulator fully blamed financial institutions for all risks of blockchain operations related to code bugs, attacks hackers and any other technological errors. Banks are obliged to reimburse customers for all losses, startups unlike blockchain developers, who can do this at will.
It is worth noting that the Office of the Controller of Money Circulation is headed by former Coinbase top manager Brian Brooks. In Congress, Brooks' approach to cryptocurrencies has already been criticized, and the main opponent of the initiatives was Congressman Maxine Waters.
According to Forbes, the OCC step is interesting not first of all because banks got the opportunity to work in a direction not traditional for themselves, but because the regulator did a noticeable job to follow the changes in technologies and the environment.[3]
2020: Sygnum Bank and Coinify run world's first stablecoin operation
On August 27, 2020, the Swiss-Singapore Internet bank Sygnum Bank, developer of the virtual currency platform Coinify and Switzerland's largest online retailer Digitec Galaxus announced performing the world's first electronic transaction using stablecoin. Read more here.
2018
Norilsk Nickel is going to issue a cryptocurrency provided with metals
In October 2018, it became known about the plans of Norilsk Nickel to issue its own cryptocurrency provided by the company's metals. This asset will be called Stablecoin. Read more here.
Switzerland's Tiberius Group announces launch of cryptocurrency backed by metals
On January 22, 2018, Tiberius Group, a Swiss commodity investment fund, announced the launch of a cryptocurrency backed by real metals, including those used in industry, such as aluminum and copper. The fund, which manages an investment of about $300 million, intends to issue a Tiberikoin or tcoin in July 2018, according to the fund's co-founder and executive director Christoph Eibl. Read more here.
Notes
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