Author: WOO X Research
In recent years, the rapid development of stablecoins has attracted the attention of regulatory authorities in various countries. As a type of cryptocurrency linked to fiat currency or other assets, stablecoins possess the characteristic of value stability and have been widely used in cross-border payments, DeFi, and other fields. Particularly in this cycle, the performance of RWA has been remarkable, with both traditional financial investment institutions (such as BlackRock) and Web 3 organizations (such as Sky, formerly Maker DAO) entering the space, and more investors are paying attention to this track, gradually forming a trend of oscillating upward.
(Image source link: https://defillama.com/stablecoins)
"Without rules, there's no square", and correspondingly, various governments and international organizations 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 major markets for stablecoin development, and its regulatory policies are quite complex. The stablecoin regulatory framework in the U.S. is 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 attributes, thus requiring compliance with related regulations of the Securities Act. The Office of the Comptroller of the Currency (OCC) under the Treasury Department has proposed allowing national banks and federal savings associations to provide services for stablecoin issuers, but they must comply with anti-money laundering and compliance requirements. Recently, the U.S. Congress has been discussing legislative proposals such as the Stablecoin Transparency Act, aiming to establish a unified regulatory framework for stablecoins. After the election of Trump, known as the 'crypto president', although policies have not yet been introduced, the overall outlook for crypto regulation seems to be improving.
European Union (Europe)
The EU's regulation of stablecoins primarily relies on the Markets in Crypto-Assets Regulation (MiCA).
MiCA classifies 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 U.S. dollar. Asset-Referenced Tokens (ARTs) refer to tokens pegged to certain assets (such as fiat currency, commodities, or crypto assets). MiCA establishes corresponding regulatory requirements for each type. Entities issuing stablecoins must obtain permission from EU member states and meet capital reserve, 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, introducing the main content of the upcoming stablecoin regulatory system. According to this system, companies wishing to issue or promote fiat-backed stablecoins to the public in Hong Kong must first obtain a license from the Monetary Authority. This set of regulatory requirements includes the management of reserve assets, corporate governance, risk control, information disclosure, and measures to combat money laundering and terrorist financing.
(Image source link: https://www.hkma.gov.hk/gb_chi/news-and-media/press-releases/2024/07/20240717-3/?utm_source=chatgpt.com)
In addition, the Monetary Authority of Hong Kong has also launched a 'sandbox' program for stablecoin issuers to exchange views with the industry on proposed regulatory requirements. The list of first participants was announced on July 18, 2024, including JD Coin Chain Technology (Hong Kong) Limited, Round Coin Innovation Technology Limited, and a consortium composed of 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/?utm_source=chatgpt.com)
Recently, on December 6, 2024, the government published a draft Stablecoin Regulation in the Gazette, aiming to introduce a regulatory system for fiat-backed 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 regarded as a form of digital payment token, and their issuance and circulation require permission from 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 amended the Payment Services Act (PSA) to establish a regulatory framework for the issuance and trading of stablecoins. According to the amended PSA, stablecoins fully backed by fiat currency are defined as 'Electronic Payment Instruments' (EPI) and can be used to pay for goods and services. There are specific requirements for issuing entities, namely: only three types of entities 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 regulations on stablecoins and asset tokenization are planned for 2025. In November 2024, BCB proposed a regulatory proposal suggesting that users be prohibited from withdrawing stablecoins from centralized exchanges to self-custody wallets. However, in December, the deputy head of the BCB financial system mentioned that if key issues like 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 means for cross-border financing. Overall, whether setting up regulatory sandboxes for crypto companies or defining categories based on the different characteristics of stablecoins, more and more regulatory policies regarding stablecoins will be introduced in the future. Cross-border payments also seem to become one of the most widely applied scenarios for stablecoins.