Author: WOO X Research
In recent years, the rapid development of stablecoins has attracted the attention of regulatory agencies around the world. Stablecoins, as a type of cryptocurrency linked to legal currencies or other assets, have 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 outstanding, with investment institutions from the traditional finance sector (such as BlackRock) and organizations from the web 3 sector (such as Sky, formerly Maker DAO) all entering the field, and more and more investors are paying attention to this track. A gradually formed trend of oscillating upward.
(Image source link: https://defillama.com/stablecoins)
'Without rules, nothing can be accomplished.' Consequently, 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 quite complex. The regulatory framework for stablecoins in the U.S. is jointly 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 and require compliance with relevant regulations of the Securities Act. The Office of the Comptroller of the Currency (OCC) under the Treasury Department 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 is discussing legislative proposals such as the Stablecoin Transparency Act, attempting to establish a unified regulatory framework for stablecoins. After the election of Trump, known as the 'crypto president', although policies have not yet been implemented, cryptocurrency regulation seems to be generally improving.
European Union (Europe)
The EU's stablecoin regulation mainly relies on the Markets in Crypto-Assets Regulation (MiCA).
MiCA categorizes stablecoins into Asset-Referenced Tokens (ART) and Electronic Money Tokens (EMT). Electronic Money Tokens (EMTs) refer to tokens pegged to a single legal currency, such as stablecoins pegged to the Euro or US Dollar. Asset-Referenced Tokens (ARTs) refer to tokens pegged to certain assets (such as legal currencies, commodities, or crypto assets). MiCA sets out corresponding regulatory requirements. Entities issuing stablecoins must obtain permission from EU member states and meet requirements for capital reserves, transparency disclosures, and more.
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 contents 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 management of reserve assets, corporate governance, risk control, information disclosure, and measures against 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 has launched a 'sandbox' program for stablecoin issuers to exchange views with the industry on proposed regulatory requirements. The list of the first participants was announced on July 18, 2024, including JD Coin Chain Technology (Hong Kong) Limited, Yuan 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/?utm_source=chatgpt.com)
Recently, on December 6, 2024, the government published the draft Stablecoin Regulations in the official gazette aimed at introducing a regulatory system for fiat stablecoin issuers in Hong Kong to enhance 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 obtain 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 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 legal currency are defined as 'Electronic Payment Instruments' (EPI) that can be used to pay for goods and services. There are specific requirements for issuing entities: only three types of entities can issue stablecoins: banks, money transfer service providers, and trust companies. Entities wishing to engage in stablecoin-related businesses 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 that would prohibit users from withdrawing stablecoins from centralized exchanges to self-custody wallets. However, it is reported that in December, the BCB Deputy Director of the Financial System stated that if key issues such as transaction transparency can be improved, the central bank may revoke the ban.
Summary
In addition, BRICS countries, including Russia, are considering using cryptocurrencies as a means of settlement for cross-border financing. Overall, whether it is establishing regulatory sandboxes for crypto companies or defining categories based on the different characteristics of stablecoins, 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 applied scenarios for stablecoins.