• Stellar Lumens has released fundamental ideas for policymakers, regulators, and sector experts to consider with the fiat-backed stablecoin.
• G20 finance ministers and central banks are discussing internationally coordinated rules specifically addressing cryptocurrencies, focusing on stablecoins.
• Stellar has recommended that reserves supporting these tokens be held in the corresponding currency, with independent third-party verification; that stablecoins must be backed by at least 100% of fiat money and high-quality liquid assets; as well as that process of minting and burning stablecoins should be automated to the maximum extent feasible.
Stellar Lumen Highlights Fundamental Ideas
Stellar Lumen has highlighted fundamental ideas that policymakers, regulators, and sector experts need to consider with the fiat-backed stablecoin. G20 finance ministers and central banks are in discussions to establish coordinated rules for cryptocurrencies. In a blog published on the Stellar Website, Stellar Lumen has highlighted fundamental ideas that policymakers, regulators, and sector experts need to consider with the fiat-backed stablecoin. This comes ahead of the Financial Stability Board meeting scheduled to unveil its comprehensive recommendations on regulating, supervising, and overseeing global stablecoin arrangements in July. Additionally, discussions among G20 finance ministers and central banks are underway to establish internationally coordinated rules specifically addressing cryptocurrencies focusing on stablecoins.
Recommendations From Stellar
Some recommendations that Stellar – a cross-border payment and transfer system – have come up with regarding stablecoins include: To ensure stability and integrity of these tokens; back them by at least 100% or a combination of fiat money plus high-quality liquid assets like short-term government bonds; offer transparent assurance of 1:1 redeemability; segregate customer funds from corporate funds; automate minting/burning operations to maximum extent feasible. In the recently concluded World Of Web3 (WOW) Summit held in Hong Kong, experts discussed future utilization of these asset classes.
Ensure Stability & Integrity
To ensure stability & integrity of these tokens it is recommended that reserves supporting these tokens be held in corresponding currency with independent third party verification which should also be made available publicly regularly & further back them by at least 100% or combination of fiat money plus high quality liquid assets like short term government bonds.
Transparent Assurance & Segregation Of Funds
Issuers must provide transparent assurance of 1 : 1 redeemability ensuring each token can easily trade for its specified value while segregation customer from corporate funds must be maintained clearly distinguishing between both parties’ resources .
Automated Minting And Burning Of Stable Coins
The process minting/burning should also be automated to maximum extent feasible so as alignment underlying reserve assets happens accurately thus reliable & transparent mechanism is established maintaining stability .