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Golden Sentinel丨Concerned about specific risks? The European Central Bank wants to clarify the regulation of stable currency



Golden Finance Blockchain, May 6th  In a recently released in-depth report on global stablecoins, the European Central Bank called for clear regulation of stablecoins to fill the gaps in current laws and regulations.

In a report released on Tuesday (May 5), the ECB wrote:

"In order to reap the potential benefits of a global stablecoin, a robust regulatory framework needs to be in place to address the associated risks before allowing stablecoins to function formally."

Tap into the potential of stablecoins, but not without risks

In the report, the European Central Bank listed several advantages of global stablecoins, such as transaction speed, convenience, etc., and these aspects have also been recognized by the public. However, the ECB does not shy away from the various risks and difficulties that stablecoins may pose, including stablecoins, value, and the possibility of systemic failure lights. They believe that stablecoins have a specific risk, namely: If such assets If the fixed value is lost, or the value of the assets supported by the anchor deviates from the expected level, users will not be able to cash out with the exact "stable value".

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The European Central Bank wrote in the report:

“Considering that the ‘stable value’ needs to be guaranteed, and at the same time ensure that users can convert their holdings of stablecoins into fiat currencies at any time, the risk of stablecoins should be treated as equivalent to deposits.”

The ECB report also touched on the topic of regulation. They believe that for stablecoins that support cross-border transactions, some may or may not be suitable for the current existing government regulatory framework.

Depending on the type, stablecoins can derive value from multiple sources such as mainstream financial assets, encrypted assets, and legal tender, thus blurring the scope of regulation. Some stablecoins may even belong to the category of investment rather than sources of stable prices. In response, the ECB stated:

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2. Russian Deputy Finance Minister: There is an opportunity to launch a digital currency supported by the Eurasian Economic Union countries

3. Chile's two largest banks ask court to reverse decision to block exchange account closure

4. The British government may grant the FCA regulatory authority over cryptocurrencies

5. Bermuda Publishes Draft Crypto Custody Rules

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7. Guangzhou Municipal Public Security Bureau Blockchain Technology Application Joint Laboratory was established

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“Given the complex nature of stablecoin structures, stablecoins may or may not fall under any one regulatory framework, depending on certain design features.”

Golden Morning News | Jingdong Blockchain Joint Laboratory was established, and the transaction volume of Bitcoin hit a new low in the year: 1. ING Bank launched blockchain privacy zero-knowledge technology.

2. Huobi has suspended the EOS deposit business.

3. The SEC actively provides digital currency and ICO market data to investors.

4. Deloitte seeks to add an additional layer of trust to blockchain transaction infrastructure.

5. The Beijing Municipal Science and Technology Commission and Ali Health launched a medical artificial intelligence platform based on blockchain and other technologies.

6. JD Blockchain Joint Laboratory was established.

7. BM said that it will release the first EOS hard fork improvement plan.

8. The EU Blockchain Observatory and Forum publish general data protection compliance guidelines.

9. The 24H trading volume of Bitcoin hit a new low during the year. [2018/10/22]

It is worth mentioning that by correlating relevant figures and indicators with different application scenarios, the European Central Bank has conducted in-depth research on Libra, the stable currency proposed by Facebook. Recently, the Libra Association updated the white paper and reiterated that their goal is by no means to imitate other systems, but to create an open and trustworthy system through association members and distributed technology, as well as using innovative methods of distributed governance. In the latest white paper, four major changes have been made to the design of the Libra payment system to address regulatory issues that have previously attracted special attention, including:

Golden Relativity | Xiao Lei: Stablecoins anchored by fiat currency only exist in stages: In this issue of Golden Relativity, regarding the discussion of stablecoins, Xiao Lei, a well-known financial columnist, said: Due to the current market value of the overall digital currency is relatively small, the fiat currency pool Huge, it is difficult for digital currency to reach a stable state, coupled with the exchange's demand for centralized transaction pricing, it needs to be exchanged with the actual legal currency, this kind of stable currency anchored by legal currency has to appear in stages, and in the future digital currency , some stable coins that stand out due to competition will be born to meet the needs of more trading media, and even every digital currency may become a stable coin in the field of exchange, because in the field of currency, only the exchange rate is discussed, so we need it now Stable currency is because digital currency has not yet become a currency in circulation, and everyone treats it as an investment product, so a reference is needed, and the overall ecology is far from being formed. [2018/9/20]

1. In addition to multi-currency tokens, Libra will also provide single-currency stable coins;

2. Improve the security of the Libra payment system through a strong compliance framework;

3. While maintaining the main economic characteristics, abandon the transition plan to the permissionless public chain system.

4. Establish strong protection measures for Libra's asset reserve.

The Libra Association also claims that they have absorbed feedback from regulators and will continue to develop a framework that meets financial compliance and network-wide risk management, and formulates anti-money laundering (AML), anti-terrorist financing (CFT), sanctions Compliance and standards for preventing illegal activities.

This includes establishing a “Financial Intelligence Function” (FIU-function: Financial Intelligence Function) to help support and maintain operating standards for cyber actors. The Libra network divides participants into four categories:

(i) designated dealer; 

(ii) Virtual Asset Service Providers (VASPs, including exchanges and custodian wallets) registered or licensed in a Financial Action Task Force (FATF) member jurisdiction, or in a Financial Action Task Force (FATF) member jurisdiction A Virtual Asset Service Provider that is registered or licensed and that performs Virtual Asset Service Provider activities pursuant to such license or registration (Regulated Virtual Asset Service Provider); 

(iii) Virtual Asset Service Providers who have completed the certification process approved by the Libra Association (Certified Virtual Asset Service Providers); 

(iv) Other individuals and entities seeking to transact or provide services through the Libra network (without custodial wallets).

Uncustodial wallets enable financial inclusion, broad competition, and responsible innovation, thereby facilitating the creation of services for the unbanked and banked. However, since the activities of such users may pose greater risks, they will have some restrictions on balance and transaction limits. Initially, only designated resellers and regulated virtual asset service providers will be able to access the Libra network, while the Libra Association continues to develop an accreditation process for other virtual asset service providers based on feedback received from regulators, while also targeting regulated virtual asset service providers. Hosted wallets build a compliance framework. The Libra Association intends to enable both certified virtual asset service providers and uncustodial wallets to access the Libra network after the relevant compliance framework is finalized.

The ECB also singled out the need for a comprehensive supervisory approach, concluding:

“In order to reap the potential benefits of stablecoins without compromising financial stability, the ECB must ensure that stablecoins do not operate in a regulatory vacuum.”

Part of this article is compiled from cointelegraph


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