Cointime

Download App
iOS & Android

A Global Overview of Stablecoin Regulations

Validated Venture

As the crypto industry goes from the wild west to the public’s sight, it naturally comes under growing regulatory scrutiny. Stablecoins are subject to the same regulations and policies as other cryptocurrencies. Their adoption, circulation, market breadth, and depth are heavily influenced by government attitudes. This class provides an overview of the latest regulations for stablecoins in various countries and regions, allowing you to make informed investment decisions.

Japan

Japanese authorities have been actively working on stablecoin-related regulations. The government rushed to enforce new stablecoin laws in the aftermath of the Terra collapse. In June 2022, Japan’s parliament passed a bill to ban stablecoin issuance by non-banking institutions and the domestic distribution of foreign-issued stablecoins. The bill also stipulates that the issuance of stablecoins is limited to licensed banks, registered money transfer agents, and trust companies in Japan and that stablecoins can only be pegged to the Japanese yen or another legal tender.

Only four months later, Japan’s Financial Services Agency (FSA) was reportedly reconsidering the restrictions related to the use of stablecoins like USDT or USDC and started collecting feedback on proposals for lifting the stablecoin ban in Japan. “If payment using stablecoins spreads, international remittances may become faster and cheaper,” the report notes.

Overall, Japan has a positive attitude towards cryptocurrencies. Prime Minister Fumio Kishida once emphasized that nonfungible tokens (NFTs), blockchain, and the metaverse will play essential roles in the nation’s digital transformation. In addition, the Japanese government is set to ease the tax requirements for local crypto firms. Japan places a strong emphasis on financial stability, user protection, and anti-money laundering/combating the financing of terrorism (AML/CFT). As a result, it takes a cautious approach to stablecoin policies.

The UK

The UK has long been a crypto-friendly country. At a meeting of the UK Parliament Treasury Committee held in January 2023, HM Treasury Economic Secretary Andrew Griffith underscored the value of stablecoins, saying stablecoins are “here now” and therefore in need of immediate attention. He noted that it is unclear whether a central bank digital currency (CBDC) would displace private stablecoins on the market if it were introduced. Griffith set the intention to build out a regime for crypto assets and stablecoins “that foster growth and innovation” in 2023, though suggested that no new legislation is likely to come out this year.

UK lawmakers already agreed on new rules for stablecoins back in October 2022. According to the bill, the government plans to begin with the most stable, least volatile coins that are likely to be used by intermediaries as settlement currencies, and future stablecoins will be approved based on consultation. Beyond that, Rishi Sunak — the youngest UK prime minister that has ever assumed office at 10 Downing Street — previously showed support for cryptocurrency, stating that he wanted to make the UK a global hub for the crypto industry.

Overall, the UK is a crypto-friendly country that acknowledges the value of stablecoins. But it should be noted that EU countries, unlike the UK after Brexit, prefer CBDC to stablecoins and are more cautious about the latter. It is reported that the EU crypto rules will limit the market share of non-euro denominated stablecoins starting from 2024. This stance will undoubtedly have an impact on the crypto projects that have been or expect to be established in the EU.

Singapore

Singapore is arguably among the world’s most active countries in creating crypto regulation. Both friendly and rigorous, Singapore is, on the one hand, committed to building a crypto-friendly city, trying to be a pioneer in the Web3 era of the future, while on the other hand, it has paid the price for its aggressiveness. Take Singapore state-owned investor Temasek as an example: its investment in FTX has caused a massive blow to its reputation, which once even landed the country’s prime minister and the ruling government in trouble with strong accusations from the opposition.

The Monetary Authority of Singapore (MAS) has introduced proposals to better regulate the cryptocurrency industry following the bankruptcy of the Singaporean crypto hedge fund Three Arrows Capital (3AC). In a consultation paper, MAS proposed to restrict stablecoin issuers from lending or staking single-currency pegged stablecoins (SCS) “to ring fence and mitigate risks to the stablecoin issuer”. However, it is also highlighted in this document that “MAS does not intend to prohibit any form of stablecoins”. Existing policies indicate that MAS actually welcomes stablecoins.

Hong Kong

Hong Kong has been gradually reaffirming its pro-crypto stance over the past year, becoming one of the most crypto-ready regions across the globe. The new licensing program, scheduled to take off in June, will restrict retail traders in Hong Kong to “highly liquid” digital assets, according to the new CEO of Hong Kong’s Securities and Futures Commission (SFC), Julia Leung Fung-yee. The CEO also pointed out that proper regulation could prevent issues, such as the collapse of the FTX exchange, from happening in Hong Kong.

In addition, Hong Kong Monetary Authority (HKMA) found that the instabilities of crypto assets, including asset-backed stablecoins, can potentially spill over to the traditional financial system. Hong Kong’s government also announced its readiness to engage with global crypto exchanges on regulatory issues. On January 31, the HKMA issued the conclusion of the discussion paper on cryptocurrencies and stablecoins, noting the importance of “full backing and redemption at par”. This means that stablecoins that derive their value based on algorithms will no longer be accepted. The regulatory arrangements are expected to be implemented in 2023/24 through the introduction of new legislation or amendment to existing laws.

Wu Jiezhuang, a member of the Legislative Council of the Hong Kong Special Administrative Region, believes that turning the Hong Kong digital dollar (e-HKD) into a stablecoin would facilitate the adoption of new technologies like Web3. Such a design of the Hong Kong digital dollar would help authorities gain investors’ trust in the Web3 industry and better protect users from hacks. It remains to be seen what kind of synergy is to be created between government-issued CBDC and the existing stablecoins in the market.

El Salvador, Brazil, and other LATAM countries

Latin Americans are more fervent crypto enthusiasts than people in any other country. For instance, El Salvador has announced the adoption of BTC as its legal tender; Dominica has granted seven TRON tokens, including the TUSD stablecoin, statutory status as the authorized digital currency and legal tender of the nation. Echoing this trend, Brazil, the largest LATAM country by both land area and population, has shown its crypto-friendliness by establishing a licensing regime around cryptocurrency.

In late 2022, the Chamber of Deputies of Brazil passed a regulatory framework that legalizes the use of cryptocurrencies as a payment method within the country. The bill is expected to take effect around June 2023. While Brazil has not made Bitcoin a legal tender as El Salvador did, this regulatory framework marks significant progress for crypto within Brazil. Moreover, Banco Central do Brasil, the central bank of Brazil, has started to grant Payment Institution License (EMI) to institutions. Without a doubt, this move will drive the growth of crypto payments, including stablecoins, in Brazil.

In October 2022, Brazil’s Rio de Janeiro introduced a bill allowing taxpayers to pay tributes with crypto. The city mayor said in a statement, “We are following technology and economic advances in the universe of digital financial assets. We look to the future and want to become the country’s capital of innovation and technology.”

In the current financial revolution, Latin American countries are proving to be strong competitors, despite challenges such as limited capital and less established regulations. They are keeping pace with and even outpacing traditional financial centers like the UK and Hong Kong, known for their abundant capital and well-established regulations. The reasons behind this are multifold. To start, the post-colonial economy being less advanced means it carries no historical baggage. Additionally, the currencies in the area have a lackluster reputation, leading to a crypto-friendly atmosphere where people eagerly embrace cryptocurrencies for a more favorable financial outlook.

Concluding remarks:

Countries across the globe generally acknowledge the value of stablecoins for their user-friendliness and low volatility in cross-border settlements, despite their inherent risks as cryptocurrencies. They are, by and large, accepted in major financial regions, such as the UK, Japan, Hong Kong, and Singapore, and even more so in emerging countries like Latin America. However, authorities remain cautious in their approach to legalizing cryptocurrencies and are carefully conducting discussions and gathering public opinion before passing any laws.

Countries across the globe are generally more supportive of compliant stablecoins. Many countries and regions have passed laws and given them statutory status. As a compliant stablecoin with an excellent reputation and track record, TUSD is a good underlying asset for your crypto portfolio. In 2022, TUSD was granted statutory status as an authorized digital currency and a medium of exchange in the Commonwealth of Dominica, making it one of the few stablecoins endorsed by authorities. The legal status of TUSD is a strong boost to its growth in the crypto space and is conducive to its long-term development in Eastern Caribbean and Latin America.

Some of the material came from news reports

Get the latest news here: Cointime channel — https://t.me/cointime_en

Comments

All Comments

Recommended for you

  • Xinjiang launches special campaign to combat illegal fundraising, with key areas including virtual currency, blockchain, etc.

    According to Chang'an Xinjiang Public Account, Xinjiang Autonomous Region and Corps have launched a joint special action to crack down on illegal fund-raising, with key areas including third-party wealth management, fake private equity, fake gold exchange and other traditional fields, as well as emerging fields such as virtual currency, blockchain, cultural tourism, film and television investment, and debt resolution services. It is reported that key cases include cases involving more than 100 million yuan and cases that have been criminally filed for more than five years.

  • A British court has postponed the final sentencing of Wen Jian, a British-Chinese national involved in the country's largest Bitcoin money laundering case, until May 24.

    On May 11th, it was reported that Jian Wen, a 42-year-old British Chinese citizen, was found guilty of "participating in arranging money laundering" in the UK's largest Bitcoin money laundering case. He could be sentenced to up to 14 years in prison. Jian Wen's defense lawyer, Mark Harries, stated that due to the judge's busy schedule, the UK court has postponed Jian Wen's final sentencing, which was originally scheduled for May 10th, to May 24th.

  • Web3 startup Star Nest completes $6 million in Pre-A round of financing

    Hong Kong Web3 music startup Star Nest announced that it has completed a $6 million Pre-A round of financing, led by Chuangqi International Limited, a wholly-owned subsidiary of Hong Kong Stock Exchange-listed company Guofu Innovation. Star Nest will collaborate with Armonia Meta Chain to develop the Star Nest SpaceStar metaverse game, which includes music, role-playing, and social features.In addition, Star Nest plans to launch its NEST project in the third quarter of 2024. Nest will receive 2.1 billion NEST tokens tailored for the project, and Star Nest will use the NEST token to build a more complete music industry token economic system. The NEST token will be widely used for purchasing performance tickets, chain game cooperation, metaverse consumption, governance voting, and other activities.

  • Over $594 million worth of PYTH is staked

    According to Dune data,  there are currently 1,201,167,362 PYTH tokens in the staked state, with a total staked value exceeding $594 million. The number of PYTH stakers has reached 151,211.

  • US Department of Justice: Tornado Cash indictment has nothing to do with "free speech"

    On May 11th, the US Department of Justice explained why the motion to dismiss the criminal case against Tornado Cash founder Roman Storm was invalid. The Department of Justice reiterated that their indictment was not related to whether the Tornado Cash computer code had freedom of speech or was protected by the First Amendment of the Constitution. The defendant was not charged for publishing computer code, but for using it to facilitate profitable illegal activities.

  • USDC circulation decreased by $100 million in the past week, with a total circulation of $33 billion

    According to official data,as of May 9th, Circle has issued approximately $2 billion USDC and redeemed approximately $2 billion USDC in the past 7 days, with a decrease in circulation of approximately $100 million. The total circulation of USDC is $33 billion, with a reserve of $33.1 billion, including approximately $3.3 billion in cash and Circle Reserve Fund holding approximately $29.8 billion.

  • SEC rejects Coinbase's request for appeals court ruling on cryptocurrency rules

    The US SEC has rejected Coinbase's request to appeal to the court to review whether traditional securities rules are applicable to cryptocurrencies. In its application, Coinbase stated that it hoped the appeals court would consider whether the Howey test, which has long been used for securities evaluation, should be applied to digital assets. However, the SEC pointed out that Coinbase has not successfully demonstrated the need for such an evaluation. The SEC stated that Coinbase is attempting to create a "new legal test," but this attempt was rejected by the court. The court found that Coinbase's arguments lacked consistency and did not successfully demonstrate the existence of decisive issues. Currently, the judge responsible for hearing the SEC's case against Coinbase will make a ruling on Coinbase's intermediate appeal motion.

  • Colombian President Suspected of Accepting $500,000 in Illegal Crypto Donations

    Colombian President Gustavo Petro is suspected of accepting over $500,000 in digital token donations from a fraudulent cryptocurrency project during his 2022 election campaign. A former contractor revealed that the illegal donation occurred during a meeting in February 2022 that discussed the advantages of cryptocurrency and the possibility of working with the government. This allegation is one of the latest charges faced by President Petro during his election campaign, with the Colombian Prosecutor's Office investigating his campaign last year.

  • Fed's Kashkari: The bar for another rate hike is high, but it cannot be ruled out

    The Federal Reserve's Kashkari expressed a cautious attitude towards restrictive monetary policy; he is adopting a wait-and-see attitude towards future monetary policy; he is in a wait-and-see state to see if inflation is stagnating; the threshold for raising interest rates again is high, but this possibility cannot be ruled out; if inflation data supports it, the Fed will maintain interest rates.

  • The address that defrauded 1,155 wBTC has returned more than 96% of the funds to the victims

    Blockchain data shows that the address poisoning attacker lured users to send 1,155 Wrapped Bitcoins (wBTC) (valued at $68 million at the time) to them. The attacker has returned almost all of the stolen funds. These funds were exchanged for Ethereum (ETH) during the attacker's holding period, and the price of ETH has since fallen. However, the attacker returned about 22,960.07 ETH, worth about $65.7 million, which accounts for over 96% of the initial stolen funds in terms of US dollar value.