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Regulation & Policy

MiCA, the GENIUS Act, e-money frameworks and supervisory approaches.

14 of 33 indexed papers · the whole library

Paper Venue Year
High-level Recommendations for the Regulation, Supervision and Oversight of Global Stablecoin Arrangements Financial Stability BoardThe FSB's finalized international recommendations for regulating global stablecoin arrangements.
Key findings
  • Sets 'same activity, same risk, same regulation' as the guiding principle for stablecoins.
  • Requires robust governance, redemption rights, and reserve/stabilization safeguards for GSCs.
 Financial Stability Board 2023
Regulation (EU) 2023/1114 on Markets in Crypto-Assets (MiCA) European Parliament and Council of the European UnionThe EU's comprehensive crypto-asset framework; regulates stablecoins as e-money tokens (EMTs) and asset-referenced tokens (ARTs).
Key findings
  • Classifies fiat-pegged stablecoins as e-money tokens (EMTs) and multi-asset/other pegs as asset-referenced tokens (ARTs).
  • Requires issuer authorization, adequately backed reserves, and redemption at par for holders.
  • Imposes usage/transaction caps on large non-euro tokens used widely as a means of exchange.
 Official Journal of the European Union 2023
Regulatory regime for systemic payment systems using stablecoins and related service providers Bank of EnglandThe Bank of England's proposed regime for stablecoins used at systemic scale in UK payments.
Key findings
  • Systemic payment stablecoins should be backed by deposits at the central bank (or equivalent high-quality assets).
  • Proposes holding limits during a transition to manage financial-stability risks.
 Bank of England Discussion Paper 2023
Application of the Principles for Financial Market Infrastructures to stablecoin arrangements CPMI, IOSCOConfirms that systemically important stablecoin arrangements must meet the international standards for payment systems.
Key findings
  • Systemic stablecoin arrangements are expected to observe the Principles for Financial Market Infrastructures.
  • Emphasises settlement finality, governance and comprehensive risk management.
 CPMI-IOSCO (BIS) 2022
Stablecoins as a tool to mitigate the downside risk of cryptocurrency portfolios Antonio Díaz, Carlos Esparcia, Diego HuélamoThis paper empirically assessed the ability of three stablecoins to mitigate the downside risk of a traditional cryptocurrency portfolio. The findings indicated that dollar-backed stablecoins are particularly suitable as a hedge for crypto investors.
Key findings
  • Dollar-backed stablecoins have low conditional correlations with cryptocurrency portfolios.
  • All stablecoins considered have high diversification capacities by systematically reducing portfolio tail risk.
 The North American Journal of Economics and Finance 2022
Stablecoins' role in crypto and beyond: functions, risks and policy European Central BankECB assessment of stablecoin functions (trading, settlement, DeFi collateral) and their financial-stability risks.
Key findings
  • Largest stablecoins are used mainly for crypto trading, settlement and DeFi rather than real-economy payments.
  • Reserve opacity and redemption terms are key risks warranting regulation.
 ECB Macroprudential Bulletin, Issue 18 2022
The future monetary system Bank for International SettlementsThe BIS's vision of a future monetary system, assessing stablecoins and crypto against a central-bank-money core.
Key findings
  • Argues stablecoins piggyback on the credibility of central-bank money and can fragment the monetary system.
  • Positions CBDCs and tokenized central-bank money as the preferred foundation.
 BIS Annual Economic Report 2022, Chapter III 2022
On the stability of stablecoins Klaus Grobys, Juha-Pekka Junttila, James W. Kolari, Niranjan SapkotaThis paper investigates the volatility processes of stablecoins and their relationship with Bitcoin volatility. It finds that Bitcoin volatility influences the volatilities of stablecoins, which are statistically unstable.
Key findings
  • Bitcoin volatility is well-behaved in a statistical sense with a finite theoretical variance.
  • The volatilities of stablecoins are statistically unstable and respond to Bitcoin volatility.
  • Lagged Bitcoin volatility exhibits Granger-causal effects on the volatilities of stablecoins.
 Journal of Empirical Finance Top-tier journal 2021
Regulating Libra Dirk A. Zetzsche, Ross P. Buckley, Douglas W. ArnerLegal analysis of the regulatory challenges posed by Libra/Diem-style global stablecoins.
Key findings
  • A global multi-currency stablecoin raises novel cross-border regulatory-perimeter questions.
  • Recommends coordinated, function-based regulation across jurisdictions.
 Oxford Journal of Legal Studies Top-tier journal 2021
Report on Stablecoins President's Working Group on Financial Markets, FDIC, OCCThe landmark US interagency report recommending that payment-stablecoin issuers be regulated as insured depository institutions.
Key findings
  • Recommends Congress require payment-stablecoin issuers to be insured depository institutions.
  • Identifies run risk, payment-system risk, and systemic risk / concentration of economic power as the principal concerns.
  • Set the template for subsequent US stablecoin legislation.
 U.S. Department of the Treasury 2021
Taming Wildcat Stablecoins Gary B. Gorton, Jeffery Y. ZhangArgues stablecoins recreate the instability of the 19th-century 'wildcat' free-banking era and proposes regulating issuers like banks or issuing a CBDC.
Key findings
  • Privately produced money that does not trade at par 'no-questions-asked' is inherently run-prone, mirroring pre-1863 wildcat banking.
  • Recommends either bringing stablecoin issuers under bank-style regulation and insurance, or introducing a central bank digital currency.
  • Frames stablecoins as a monetary-stability question, not merely a consumer-protection one.
 SSRN Working Paper; later University of Chicago Law Review Top-tier journal 2021
Stablecoins: risks, potential and regulation Douglas Arner, Raphael Auer, Jon FrostA foundational BIS framework classifying stablecoins by design and reserve model and mapping their risks to regulatory options.
Key findings
  • Stablecoins span a spectrum from fully reserved tokenized funds to fractional and algorithmic designs, with materially different risk profiles.
  • Regulation should follow a 'same risk, same regulation' principle rather than treating all stablecoins alike.
  • Global stablecoins raise cross-border, monetary-sovereignty and financial-stability concerns beyond any single jurisdiction.
 BIS Working Papers No. 905 2020
In search for stability in crypto-assets: are stablecoins the solution? Dirk Bullmann, Jonas Klemm, Andrea PinnaECB taxonomy of stablecoins by stabilization mechanism, assessing whether each can deliver price stability.
Key findings
  • Classifies stablecoins into tokenized funds, off-chain and on-chain collateralized, and algorithmic types.
  • Argues stability depends on the credibility of the stabilization mechanism and its governance.
 ECB Occasional Paper No. 230 2019
Investigating the impact of global stablecoins G7 Working Group on StablecoinsThe G7 report that put 'global stablecoins' on the international policy agenda after Libra.
Key findings
  • Global stablecoins could pose risks to monetary sovereignty, financial stability and fair competition.
  • No global stablecoin should launch until legal, regulatory and oversight challenges are addressed.
 Committee on Payments and Market Infrastructures (BIS) 2019
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