Author: WOO
In recent years, the rapid development of stablecoins has attracted the attention of regulatory authorities in various countries. Stablecoins, as cryptocurrencies pegged to fiat currencies or other assets, have stable value characteristics and are widely used in areas such as cross-border payments and DeFi. Particularly in this cycle, RWA has performed exceptionally well, with both investment institutions from traditional finance (such as BlackRock) and organizations from web 3 (such as Sky, formerly MakerDAO) entering the space, and more and more investors are paying attention to this sector. A trend of oscillating upward formation is gradually emerging.
Image source link: https://defillama.com/stablecoins
'Without rules, nothing can be accomplished,' and as a result, governments and international organizations around the world have begun to introduce policies to regulate stablecoins. This article provides a brief summary of the current regulatory dynamics.
United States (North America)
The United States is one of the main markets for stablecoin development, and the regulatory policies are relatively complex. The regulatory framework for stablecoins in the United States is mainly implemented by multiple agencies, including the Treasury Department, the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission (CFTC).
For certain stablecoins, the SEC may consider them to have securities characteristics, requiring compliance with relevant regulations (securities law). The Office of the Comptroller of the Currency (OCC), under the Treasury Department, had proposed allowing national banks and federal savings associations to provide services to stablecoin issuers, but they must comply with anti-money laundering and compliance requirements. Recently, the U.S. Congress is discussing legislative proposals such as the (Stablecoin Transparency Act) in an attempt to establish a unified regulatory framework for stablecoins. Following the election of Trump, known as the 'crypto president,' although policies have not yet been implemented, crypto regulation seems to be generally improving.
European Union (Europe)
The EU's stablecoin regulation mainly relies on the (Regulation on Markets in Crypto-assets) (MiCA).
MiCA divides stablecoins into Asset-Referenced Tokens (ART) and Electronic Money Tokens (EMT). Electronic Money Tokens (EMTs) refer to tokens pegged to a single fiat currency, such as stablecoins pegged to the Euro or the US Dollar. Asset-Referenced Tokens (ARTs) refer to tokens pegged to certain assets (such as fiat currencies, commodities, or crypto assets). MiCA establishes corresponding regulatory requirements for each. Entities issuing stablecoins must obtain permission from EU member states and meet capital reserves, transparency disclosure, and other requirements.
Hong Kong (Asia)
On July 17, 2024, the Hong Kong Monetary Authority and the Financial Services and the Treasury Bureau jointly released a consultation summary, outlining the main content of the upcoming stablecoin regulatory system. According to this system, companies wishing to issue or promote fiat stablecoins to the public in Hong Kong must first obtain a license from the Monetary Authority. This set of regulatory requirements includes managing reserve assets, corporate governance, risk control, information disclosure, and combating money laundering and terrorist financing.
Image source link: https://www.hkma.gov.hk/gb_chi/news-and-media/press-releases/2024/07/20240717-3/
In addition, the Monetary Authority has launched a 'sandbox' program for stablecoin issuers to exchange opinions with the industry on proposed regulatory requirements. The list of initial participants was announced on July 18, 2024, including JD Coin Chain Technology (Hong Kong) Limited, Round Coin Innovation Technology Limited, and a consortium formed by Standard Chartered Bank (Hong Kong) Limited, Animoca Brands Limited, and Hong Kong Telecommunications Limited.
Image source link: https://www.hkma.gov.hk/gb_chi/key-functions/international-financial-centre/stablecoin-issuers/
Recently, on December 6, 2024, the government published the (Stablecoin Regulation Draft) in the official gazette, aiming to introduce a regulatory system for fiat stablecoin issuers in Hong Kong to improve the regulatory framework for virtual asset activities.
Singapore (Asia)
According to Singapore's (Payment Services Act), stablecoins are considered a type of digital payment token, and their issuance and circulation must be licensed by the Monetary Authority of Singapore (MAS). MAS provides a regulatory sandbox for startups to test business models related to stablecoins.
Japan (Asia)
In June 2022, Japan revised the (Payment Services Act) (PSA) to establish a regulatory framework for the issuance and trading of stablecoins. According to the revised PSA, stablecoins fully backed by fiat currency are defined as 'Electronic Payment Instruments' (EPI), which can be used to pay for goods and services. There are specific requirements for issuing institutions, namely: only three types of institutions can issue stablecoins: banks, money transfer service providers, and trust companies. Institutions wishing to engage in stablecoin-related business must first register as Electronic Payment Instrument Service Providers (EPISP) to obtain the necessary licenses to provide services.
Brazil (South America)
BCB President Roberto Campos Neto stated in October 2024 that there are plans to regulate stablecoins and asset tokenization in 2025. In November 2024, BCB proposed a regulatory proposal suggesting that users be prohibited from withdrawing stablecoins from centralized exchanges to self-custodial wallets. According to reports, in December, the Deputy Director of BCB's Financial System indicated that if key issues such as transaction transparency could be improved, the central bank might lift the ban.
Summary
Additionally, the BRICS countries, including Russia, are considering using cryptocurrencies as a settlement method for cross-border financing. Overall, whether it is establishing regulatory sandboxes for crypto companies or categorizing stablecoins based on their different characteristics, more and more regulatory policies for stablecoins will be introduced in the future. Cross-border payments also seem to become one of the most widely used scenarios for stablecoins.