• About
  • Advertise
  • Contact
Cryptopolitan
  • Home
  • News
    • Bitcoin
    • Binance
    • Ripple
    • Ethereum
    • Cardano
  • Guides
  • Regulation
  • Price Index
    • Bitcoin Price
    • Ethereum Price
    • Ripple Price
    • Cardano Price
    • Binance Coin Price
  • Research
  • Scam
  • Events
No Result
View All Result
Cryptopolitan
  • Home
  • News
    • Bitcoin
    • Binance
    • Ripple
    • Ethereum
    • Cardano
  • Guides
  • Regulation
  • Price Index
    • Bitcoin Price
    • Ethereum Price
    • Ripple Price
    • Cardano Price
    • Binance Coin Price
  • Research
  • Scam
  • Events
No Result
View All Result
Cryptopolitan
No Result
View All Result
Home News Altcoin News

ECB paper on stablecoins highlights their threat to global financial stability

Gurpreet Thind by Gurpreet Thind
May 6, 2020
in Altcoin News
2 min read
ECB paper on stablecoins highlights their threat to global financial stability
585
SHARES
3.2k
VIEWS
Share on FacebookShare on Twitter

A recently published ECB paper on stablecoins shows how malfunctioning stablecoins can pose a severe threat to global economic security. A paper published by the European Central Bank highlights how stablecoins, if launched without many insights, can threaten traditional financial systems and lead to destabilization of economies.

Stablecoins provide an alternative to other, more volatile crypto-assets, but they can fall under very different regulatory regimes. Global stablecoins would need a robust regulatory framework as they could pose a risk to financial stability. Read more https://t.co/mdfAGS2LZm pic.twitter.com/Z5yApMJxC9

— European Central Bank (@ecb) May 5, 2020

The ECB paper explains how stablecoin projects, including Facebook Libra, have unnerved numerous financial watchdogs to study their benefits and disadvantages. Moreover, many countries put in place suitable restrictions to regulate their launches to avoid any unnecessary financial complications. Also, most states have strict compliance standards already in place to ensure risks are mitigated well before launch.

RelatedPosts

Weekly Crypto Price Analysis 12th Apr: BTC, ETH, BNB, SUSHI, UNI

Uniswap price prediction: UNI/USD stuck at $30 as bullish momentum wanes

IOTA price prediction: IOTA breaks key resistance, all-time high soon?

Stellar Price Prediction: XLM moving nearer to 20% price appreciation

ECB paper on stablecoins exposes chinks in the stablecoin armor

Stablecoins pose a whole different range of issues when it comes to regulation. Financial regulators often have to enact a torrid of complicated arrangements consisting of myriad operational partners and legal entities to ensure smooth compliance. Unlike traditional finance, stablecoins requires a complex maze of regulatory and compliance mechanisms, says ECB paper on stablecoins.

For example, asset management features of stablecoins are usually covered as per existing regulations. However, many other facets pertaining to a stablecoin’s asset management cannot be covered using formal mechanisms. Whether or not the users can claim the asset pegged to the stablecoin or not is a question that often perplexes the watchdogs.

Stablecoins must be compliant, or otherwise, they risk financial threat

The ECB paper on stablecoins further says that since the word contains ‘stable,’ the investors often assume that these assets have suitable backing and represent a stable asset. Such an assumption often causes them to ignore the various risks associated with a stablecoin, their payments, and transaction features.

The paper highlights how unregulated stablecoins launch can bring all these risks to the fore at an unprecedented scale. It would be too late before authorities realize how to handle the risks. ECB further mentions that stablecoin promoters must ensure that they are fully compliant with all the legal and technical aspects of the stablecoin well before launch. Regulations, both domestic and international, must be fully adhered to. Financial regulators must also build a suitable framework to avoid unnecessary scenarios.

Gurpreet Thind

Gurpreet Thind

Gurpreet Thind is pursuing Masters in Electrical Engineering at University of Ottawa. His scholarly interests include IT, computer languages and cryptocurrencies. With a special interest in blockchain powered architectures, he seeks to explore the societal impact of digital currencies as finance of the future. He is passionate about learning new languages, cultures and social media.

Related Posts

Weekly Crypto Price Analysis 12th Apr: BTC, ETH, BNB, SUSHI, UNI
Altcoin News

Weekly Crypto Price Analysis 12th Apr: BTC, ETH, BNB, SUSHI, UNI

April 12, 2021
Uniswap price prediction UNIUSD stuck at $30 as bullish momentum wanes
Altcoin News

Uniswap price prediction: UNI/USD stuck at $30 as bullish momentum wanes

April 9, 2021
IOTA price prediction: IOTA breaks key resistance, all-time high soon? 1
Altcoin News

IOTA price prediction: IOTA breaks key resistance, all-time high soon?

April 9, 2021
Stellar Price Prediction
Altcoin News

Stellar Price Prediction: XLM moving nearer to 20% price appreciation

April 8, 2021
SushiSwap Price Prediction 2021-04-07
Altcoin News

SushiSwap price prediction: SushiSwap breaks below $14, bearish momentum to continue?

April 7, 2021
Stellar Price Prediction
Altcoin News

Stellar Price Prediction: XLM rally might develop another 30% price surge

April 7, 2021

Follow Us

  • 51k Fans
  • 8.3k Followers

Latest News

Weekly Crypto Price Analysis 12th Apr: BTC, ETH, BNB, SUSHI, UNI

Weekly Crypto Price Analysis 12th Apr: BTC, ETH, BNB, SUSHI, UNI

April 12, 2021
bitcoin mining

How does Bitcoin Mining Work?

April 12, 2021
Binance coin

Binance coin surges as Nasdaq prepares for Coinbase listing

April 12, 2021
Chainlink Price Prediction 2021-04-12

Chainlink price prediction: Chainlink continues trending higher, preparest to test resistance at $35

April 12, 2021
Binance Coin price

Binance Coin price prediction: BNB to face rejection at $600 as bulls stumble

April 12, 2021

Signup To The Daily Roundup

Get New Posts By Email:
Privacy Policy

Got a Story tip? Email Contact@Cryptopolitan.com

News

Guides
Bitcoin News
Blockchain News
Ethereum News
Industry News
Research News
Scam News
Regulation News
Exchange News
Bitcoin Price
Ethereum Price
Bitcoin Cash Price
Cardano Price
Dash Price

Stay Connected

Facebook
Twitter
Telegram
Youtube

Company

About
Contact
Write for us
Advertise with us
Privacy Policy
Cookie Policy
Comment Policy
Editorial Policy
Terms and Conditions
Crypto Portfolio Tracker
Sitemap

Exclusive Partners of

Footer 2

Got a Story tip? Email Contact@Cryptopolitan.com

cryptopolitan 1

News

Guides
Bitcoin News
Blockchain News
Ethereum News
Industry News
Research News
Scam News
Regulation News
Exchange News
Bitcoin Price
Ethereum Price
Bitcoin Cash Price
Cardano Price
Dash Price

Stay Connected

Facebook
Twitter
Telegram
Youtube

Company

About
Contact
Write for us
Advertise with us
Privacy Policy
Cookie Policy
Comment Policy
Editorial Policy
Terms and Conditions
Crypto Portfolio Tracker

Cryptopolitan brings you quality Blockchain and Cryptocurrency news, ICO reviews, crypto technical analysis, and other unique news insiders. We cover Bitcoin news, altcoins news, blockchain projects news, ICO news, regulatory developments and the confluence of news on the leading blockchain technologies.

© 2021 Cryptopolitan. All rights reserved. Terms | Privacy

No Result
View All Result
  • Home
  • News
    • Bitcoin
    • Binance
    • Ripple
    • Ethereum
    • Cardano
  • Guides
  • Regulation
  • Price Index
    • Bitcoin Price
    • Ethereum Price
    • Ripple Price
    • Cardano Price
    • Binance Coin Price
  • Research
  • Scam
  • Events

Copyright © 2020 Cryptopolitan.

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.