Legal Regulation of Stablecoins

Abstract

As a type of digital currency, stablecoin is expected to overcome the disadvantage of large fluctuation in the value of digital currencies through a series of mechanisms. Thus the stability of currency value could be realized to achieve its applications including payment. There are two major control capabilities in stablecoins: control over data and control over huge assets. These two capabilities enable the stablecoins to gain huge market advantages, which will actually become a new type of infrastructure and have an impact on social public life. Nevertheless, there are also huge risks behind the advantages. With the platform attribute, stablecoins will be developed to be “too large to fail”. Once it’s out of control, there will be risks in reserve asset management, data, operation, and competition. We should consider stable currency as an infrastructure, to establish a stable currency reserve management system and consumer protection system, as well as to improve the stable currency platform data access system, and the power and responsibility allocation of regulatory authorities.