Analysis and Outlook on Stablecoin Regulatory Regulations

Recently, Hong Kong and the United States have successively passed legal documents regarding stablecoins. These regulations provide a clear framework for the issuance and regulation of stablecoins, attracting widespread attention from the industry. This article will briefly analyze these two legal documents and discuss the development prospects of stablecoins.

1. Analysis of the Hong Kong Stablecoin Regulatory Draft

The "draft" clearly defines stablecoins, including the following aspects:

1. Presentation form: expressed in terms of pricing units or storage of economic value.

2. Scope of application: used for payment of goods and services, debt settlement, investment and trading.

3. Storage and transfer method: Operate electronically on a distributed ledger.

4. Value Basis: Pegged to a single asset or a basket of assets.

The "draft" also specifies regulations for stablecoins:

1. The issuer must be a company with a minimum capital of 25 million Hong Kong dollars.

2. Reserve asset requirements: The market value must be greater than or equal to the face value of unredeemed stablecoins, and must be managed in isolation, audited regularly, and disclosed.

3. Risk management requirements: timely fulfillment of payments, establishment of KYC, AML and other systems.

4. Prohibit paying interest, only stablecoin business is allowed.

Overall, Hong Kong hopes to provide innovative payment tools for the new economy while mitigating risks.

II. Analysis of the U.S. Stablecoin Uniform Standards Guarantee Act

The regulatory logic of the "bill" in the United States is similar to that of the "draft" in Hong Kong, with the main difference being:

1. The regulatory framework is divided into two levels: federal regulation for market capitalizations over 10 billion USD, and optional state-level regulation for those below 10 billion USD.

2. The requirements for reserve assets are clearer, such as U.S. Treasury bonds.

3. Grant regulatory powers to the Minister of Finance and the newly established review committee.

Overall, the regulations in both regions have legalized local currency stablecoins and brought them under regulation, providing settlement tools for emerging economies while mitigating risks.

3. Comparison of Stablecoins and Traditional Payment Tools

The issuance and management rules of stablecoins are basically the same as those of bank notes and are similar to authorized currency issuance. They both require 100% reserve backing and can be used for payment or cash redemption.

Stablecoins, as a new type of payment tool, are generated based on specific application needs. Compared to traditional payment tools, stablecoins may be more convenient and efficient in certain emerging economic fields. However, they also face risks such as over-issuance and runs, which are key focus areas for regulation.

4. Analysis of the Demands of Stablecoin Stakeholders

The success of stablecoins depends on whether they can meet the demands of all stakeholders:

1. Payer: More convenient and secure than fiat currency, with lower costs.

2. Payee: Easy to accept, can be exchanged 1:1 for fiat currency, applicable in other scenarios.

3. Issuer: Earn income through issuance, exchange fees, or investments.

4. Technical support party: Obtain corresponding benefits.

5. Regulatory agencies: promote economic growth and maintain financial stability.

The balance of demands from all parties will determine the development direction of stablecoins.

V. The Impact of Stablecoins on Monetary Policy

As a quasi-currency, stablecoin will affect the money supply and circulation rules:

1. If the reserve assets are completely idle, it will not increase the money supply.

2. If part of it is used for investment, it will increase the currency supply.

3. The circulation patterns of stablecoins may differ from traditional cash.

4. Cross-border payments need to be integrated with the banking system.

These are factors that need to be considered in the formulation and regulation of monetary policy.

6. Suggestions for China

1. Maintain technological neutrality and encourage financial innovation.

2. Understand the real demand for stablecoins.

3. Legislate for stablecoins to promote innovation and mitigate risks.

4. Consider issuing a Renminbi stablecoin.

5. Use stablecoins to expand the application scenarios of digital RMB.

6. Establish a stablecoin payment system that integrates with the banking account system.

7. The development of the Renminbi stablecoin should prioritize serving the economy.

The development of stablecoins requires a balance between innovation and regulation, providing convenience for emerging economies while also preventing financial risks. China can draw on international experience and, combined with its own realities, explore a suitable development path.