Future of Finance


What are you doing about regulated Stablecoins?

[JUN 2023]

Regulated banks are waking up to the threats and opportunities created by the decision to bring Stablecoins within the regulatory perimeter. In both domestic and international payments and securities markets, regulated Stablecoins offer liberation from the status quo as well as the threat of disintermediation. Where doing nothing is not a survivable option, understanding exactly what is going on is essential to the formulation of a viable strategy.

What is the event about?

A decade on from the launch of the first Stablecoin, it is now clear that these instruments are here to stay and set to grow further and faster. With Stablecoins now being brought within the regulatory perimeter in a similar fashion across all major financial jurisdictions, and a growing roster of leading banks issuing tokenised deposits for use in payments between existing clients, Stablecoins are demonstrably shedding their origins in the cryptocurrency markets.

They may well prove their worth in another market that is emerging successfully from the cryptocurrency experiments: digital assets. Again, traditional banks and stock exchanges are building or acquiring tokenisation engines to help corporate and asset management issuers take advantage of the lower costs and wider distribution of fund raisings structured as digital assets. In these emergent digital asset markets, Stablecoins are poised to supply the missing cash component.

Stablecoins might also prove to be the innovation that fulfils the goal set by the G20 for cross-border payments of all kinds – not just remittances, but burgeoning e-commerce transactions – to become cheaper and faster, their costs more transparent and services more accessible. Already, they have attracted regulatory support. More importantly, the current cross-border payments infrastructure of correspondent banks plus the SWIFT messaging network has never looked more vulnerable.

In fact, the promise of regulation bears witness to the growing power of Stablecoins and tokenised deposits, because it measures the anxiety of national and international regulators about the ability of Stablecoins to disrupt not just how payments are made but also how financial markets are stabilised, how monetary policy is conducted and even how credit is credited. In short, Stablecoins and tokenised deposits could evolve into the commercial bank money of the future.

How this new form of commercial bank money will sit alongside central bank digital currencies (CBDCs) is an intriguing question which this webinar will explore. The webinar, which follows publication of the Future of Finance paper The Regulation of Stablecoins: Origins, Status and Prospects, will also assess how banks and their customers are reacting to the threats and opportunities created by the prospect of regulated Stablecoins.

Why watch?

Stablecoins are a durable innovation pioneered in the cryptocurrency markets. Their potential to disrupt the status quo in the payments and securities industries is large. Issuers, investors and intermediaries (especially banks and financial market infrastructures)  active in these markets must consider how their existing  business will be affected by regulated Stablecoins.

What topics were discussed?

  1. Have Stablecoins escaped their origins in the cryptocurrency markets?
  2. What makes Stablecoins unstable?
  3. Are Stablecoins a vector of contagion that threatens financial stability?
  4. How do tokenised deposits differ from Stablecoins?
  5. How do Stablecoins create credit?
  6. Could Stablecoins develop into a shadow banking system?
  7. How will Stablecoins inter-operate with central bank digital currencies?
  8. For banks, are Stablecoins friend or foe?
  9. Do Stablecoins threaten non-bank incumbents in the payments industry?
  10. How are Stablecoins being regulated in the major financial centres?
  11. What is the capital treatment of Stablecoins?
  12. Must non-bank issuers of Stablecoins secure banking licences?
  13. Are Stablecoins the future of international and/or domestic payments?
  14. Are Stablecoins the key to the growth of tokenised digital assets markets?
  15. Are Stablecoins an end-state or an intermediate stage in the evolution of money?

The panel

Gilbert Verdian CEO at Quant https://www.linkedin.com/in/gverdian/

Amarjit Singh Partner | EMEIA Assurance Blockchain Leader | Financial Services at EY https://www.linkedin.com/in/amarjit-singh-jeet/

Ricardo Correia Senior Technology Executive at R3 https://www.linkedin.com/in/ricardo-m-correia/

Keith Bear Fellow at the Centre for Alternative Finance at Judge Business School, University of Cambridge https://www.linkedin.com/in/keith-bear-2b7407/

Moderated by Dominic Hobson Co-Founder at Future of Finance https://www.linkedin.com/in/dominic-hobson-49b8222/

For more information please contact Wendy Gallagher on wendy.gallagher@futureoffinance.biz