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The US National Institute of Standards and Technology (NIST) published a technical paper on the ways in which stablecoins are architected and implemented. This includes a descriptive definition, commonly found properties, and distinguishing characteristics, as well as an exploration of stablecoin taxonomies, descriptions of the most common types, and examples from a list of top stablecoins by market capitalization. This document also explores related security, safety, and trust issues with an analysis conducted from a computer science and information technology security perspective as opposed to the financial analysis and economics focus of much of the stablecoin literature

The Committee on Payments and Market Infrastructures (CPMI) published a report on considerations and challenges regarding the use of stablecoin arrangements in cross-border payments. The paper acknowledges it's possible that stablecoins might cut costs, speed up payments, encourage competition and improve transparency, no stablecoin arrangements yet exist that are deemed to be properly designed and regulated and fully compliant with all relevant regulatory requirements. Further, even if such stablecoin arrangements did exist and could help to address specific cross-border payment frictions, they might not necessarily positively impact cross-border payments as the drawbacks could outweigh any potential benefits.

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.

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/

Alexis Goldstein, Director of Financial Policy, Open Markets Institute testified before the US Senate Committee on Banking, Housing, and Urban Affairs on how stablecoins work, how they are used, and their risks. "There are many investor, national security, and usability concerns with both algorithmic and asset-backed stablecoins. Congress should continue to examine if there are regulatory gaps that require new legislation to ensure consumer and investor protection as it relates to stablecoins, and regulators should continue to monitor stablecoins and ensure compliance with existing laws."

The Bank of Canada published a paper on the utility of stablecoins for retail payments. It finds that certain stablecoin arrangements offer end users greater control of their privacy, facilitate more rapid innovation and have the potential to increase transaction speeds, particularly for cross-border payments. At the same time, stablecoins may provide less consumer protection for fraud, present higher risks to the payment system and to efforts to combat financial crime, and be costlier relative to traditional payment arrangements. The paper's findings suggest that stablecoin arrangements do not currently serve as substitutes for the suite of traditional payment arrangements but instead address niche use cases or user segments that value their benefits and can accept their risks or costs.

The Bank of England published its supervision of financial market infrastructures 2022 Annual Report. It reports that the Financial Services & Markets Bill, published in July 2022 and scheduled to complete in 2023 seeks to bring systemic stablecoins into the Bank's regulatory remit, and bring the UK regime in line with standards discussed. The Bank is now working on a regulatory framework for systemic stablecoins and plans to consult on this in due course. Alongside regulation, another key component of a stablecoin regime is the potential application of the FMI Special Administrative Regime to systemic stablecoin firms. The Bank, working with His Majesty's Treasury, will continue to develop this regime to ensure it reflects international CPMI-IOSCO guidance.

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)

The Digital Euro Association (DEA) published a paper that dissects the Markets in Crypto-Assets Regulation (MiCAR) and its transformative impact on the stablecoin landscape. It explores the diverse regulatory approaches to stablecoins across major jurisdictions and how MiCAR might serve as a model for global regulation. The paper discusses the potential market opportunities MiCAR offers for stablecoin issuers, including enhanced consumer trust, clearer regulatory guidance, and increased access to the European market. Also, it covers the significant challenges stablecoin issuers face under MiCAR, from stringent compliance requirements to operational and technological strains, and how these hurdles might impact smaller issuers and market dynamics.

Paxos received full approval from the Monetary Authority of Singapore (MAS) for its Singapore entity to offer digital payment token services as a Major Payments Institution. The approval enables Paxos to issue stablecoins in line with MAS's upcoming stablecoin framework. With the approval, Singapore becomes the third market, alongside the United States and United Arab Emirates, that Paxos and its related entities are authorized to issue stablecoins. Paxos has selected DBS Bank, Southeast Asia's largest bank by assets, as its primary banking partner for cash management and custody of stablecoin reserves.

2019 looks to be the year of the stablecoin. Since the beginning of 2017, 122 stablecoin projects have been announced but are still in development. We took a look at the projects with a stablecoin that have received the most outside funding.

Transfer volumes across stablecoin platforms have risen considerably in 2019. While the number of on-chain transactions across tracked stablecoins still trail that of Venmo, the aggregate total on-chain transfer volume across the largest stablecoins has now surpassed Venmo's total payment volume .

This paper analyzes high-frequency data of the six largest stablecoins by market capitalization and finds strong evidence of excess price variations. It identifies Bitcoin as a source of this excess volatility as stablecoin returns, volatility and volumes are highly correlated with corresponding Bitcoin time-series. Importantly, it also finds evidence that stablecoins contribute to the excess volatility of Bitcoin.

U.S. Stablecoin reserves may not be fully protected by FDIC insurance. And if they aren't, then stablecoins may actually be less secure than ordinary bank deposit accounts. If people really are investing in stablecoins because they think they are safer than bank deposit accounts, I'm afraid they have allowed the smoke to get in their eyes and the mirrors to blind them.

"Can an algorithmic stablecoin truly achieve long-term viability? Will algorithmic stablecoins always be subject to extreme expansionary and contractionary cycles? Which vision of an algorithmic stablecoin is more compelling: a simple rebasing model or a multi-token "seigniorage" system (or something else entirely)?"

The primary purpose of using a stablecoin is to achieve a peg to a fiat currency, usually the U.S. dollar. However, "non-pegged" stablecoins aren't pegged to any fiat currency - their values float and change over time. Non-pegged stablecoins aim to have low short term volatility, allowing them to be practically used as a unit of account. However, over the long-term their values change according to their own demand and the demand for the underlying crypto-assets. Ampleforth, which was launched in June 2019, has been followed by Float (launched on February 5, 2021), Rai (February 17), and Fei (March 22).

This is a great summary of the potential systemic risks around Tether by Timothy Massad, ex-Chairman of the US Commodity Futures Trading Commission. He calls for a strengthening of the regulation of crypto-assets generally and in particular stablecoins. He seems supportive of the Stablecoin Tethering and Bank Licensing Enforcement (STABLE) Act, introduced in Congress last December, that would require that stablecoins be issued by a bank and would impose certain standards.

The Bank of Thailand is moving towards introducing stablecoin regulations as soon as this year. They will only cover stablecoins, and not crypto-assets like Bitcoin and Ethereum. However, the purview of the framework will not only include Thai baht-backed stablecoins, but also such digital currencies backed by foreign currencies and other assets. https://www.bot.or.th/English/PressandSpeeches/Press/2021/Pages/n1664.aspx

This column proposes locking stablecoins into an ETF-like structure with restrictions on basket composition. Stablecoin providers would be functionally similar to ETF sponsors, and stablecoins would become a new vehicle for traditional fiat currencies.

Can an algorithmic stablecoin truly achieve long-term viability? Will algorithmic stablecoins always be subject to extreme expansionary and contractionary cycles? Which vision of an algorithmic stablecoin is more compelling: a simple rebasing model or a multi-token "seigniorage" system (or something else entirely)? This article seeks to explore some of these fundamental issues, both from first principles reasoning and by drawing on some empirical data from recent months.