Crypto Stablecoin Report: Global Stablecoins Trigger Regulatory Awakening

Author: MYKEY researcher Yao Xiang

To help crypto market participants keep up to date with the development of stablecoins, we launched the MYKEY Stablecoin Report to share our interpretation of the development of stablecoins and our analysis of their development trends. We look forward to maintaining exchanges with our peers and jointly exploring the development prospects of stablecoins.

This report is the first time that the stablecoin report is published in the form of a monthly report. You are welcome to leave your suggestions.

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• The circulating market value of major stablecoins reached US$22.13 billion, an increase of US$1.51 billion in the past month.

• In the past month, the circulation of USDT, USDC, BUSD, and DAI increased by 299 million, 306 million, 301 million, and 26 million respectively; TUSD decreased by 194 million.

• USDC has moved beyond Ethereum and has been deployed on Algorand and Solana, with a supply of over $30 million.

• BUSD continues to grow on Binance Smart Chain.

• Stablecoins have attracted the attention of global regulators, with the European Commission, the Financial Stability Board, and the International Monetary Fund each publishing regulatory frameworks or reports.

1. Overview of Stablecoin Data

In the past month (September 26, 2020 to October 25, 2020, the same below, data reports for the natural month will be provided starting next month), the basic information of each stablecoin has undergone tremendous changes.

Market circulation

Source: MYKEY, CoinMarketCap, Coin Metrics

Currently, the circulating market value of major stablecoins has reached US$22.13 billion, an increase of US$1.51 billion in the past month.

Source: MYKEY, Coin Metrics

In the past month, Tether has issued 299 million USDT on the Ethereum chain. The circulation of USDC increased by 306 million, the circulation of BUSD increased by 301 million, the circulation of DAI increased by 25.6 million, and the circulation of TUSD decreased by 194 million. The circulation of PAX, HUSD, and GUSD increased by 74.89 million, 96.12 million, and 510,000, respectively.

Number of currency holding addresses

Source: MYKEY, DeBank

Over the past month, the number of addresses holding major stablecoins in the Ethereum network has declined, decreasing by a total of 215,000.

Source: MYKEY, DeBank

The number of USDT holding addresses has dropped significantly, down by 253,000, while the number of USDC holding addresses has increased by 33,000. The number of other stablecoin holding addresses has not changed much.

Number of active addresses

Source: MYKEY, Coin Metrics

Last week, the average number of daily active addresses of major stablecoins increased by 6.55% compared to the previous week.

Number of on-chain transactions in 24 hours

Source: MYKEY, Coin Metrics

Compared with the previous month, the average daily number of transactions of major stablecoins increased by 11.83%.

24-hour on-chain transaction volume

Source: MYKEY, Coin Metrics

Source: MYKEY, Coin Metrics

The average daily transaction volume of major stablecoins fell by an average of 28.82% compared to the previous month.

2. Stablecoins go beyond Ethereum

About 70% of stablecoins still choose Ethereum as the main issuance platform, and except for USDT, which chooses to be issued on multiple chains, most stablecoins choose Ethereum as the only issuance platform. During the period of continuous congestion on Ethereum, in addition to the steady increase of USDT on Tron, stablecoins have gradually moved out of the Ethereum platform. USDC has chosen to deploy on multiple smart contract platforms, while BUSD has begun to expand within its own ecosystem.

USDC has been deployed on Algorand/Solana

Centre Alliance announced several cooperation information in September and October, announcing that it will deploy USDC assets on Algorand, Stellar, and Solana. The supply on Algorand and Solana has reached US$7.18 million and US$25 million respectively, while USDC on Stellar will be issued in the first quarter of 2021 .

BUSD continues to grow on BSC

As a stablecoin asset issued by Binance, BUSD exists in the form of ERC-20 on Ethereum, and is also deployed on Binance Chain (BEP2) and Binance Smart Chain (BEP20). With the progress of mining on BSC, the number of BUSD holding addresses on BSC has exceeded 9,100, which is basically the same as the number of BUSD holding addresses on Ethereum. Since the cross-chain bridge of the asset is provided by Binance Exchange, it is not easy to count the supply of BUSD on each chain, but according to bscscan , the supply of BUSD on BSC should have exceeded 40 million US dollars, of which the amount of BUSD in Pancake exceeds 18 million US dollars.

3. Stablecoins attract global regulatory attention

As early as 2019, stablecoins have attracted the attention of global regulators. The concept of "global stablecoin" was first formally proposed in the Global Stablecoin Assessment Report of the G7 Stablecoin Working Group in October 2019. "Global" mainly refers to the stablecoin across multiple jurisdictions. The Bank for International Settlements also released a report on strengthening cross-border payments in July 2020, proposing that central bank digital currencies and global stablecoins can provide potential support for cross-border payments.

The rapid growth of stablecoins in 2020 has attracted the attention of global regulators. The European Commission , the G20 Group's Joint Financial Stability Board , and the International Monetary Fund have successively released regulatory reports on stablecoins.

European Commission publishes regulatory framework for crypto assets and stablecoins

On September 24, the European Commission published the final draft of the regulatory framework for crypto assets. The 168-page report details the background of the proposal, the current status of crypto asset development, and regulatory recommendations for stablecoins.

The report points out that although the size of the crypto-asset market is still small and does not currently pose a threat to financial stability, this may change with the emergence of "global stablecoins". Because "global stablecoins" have a stable value and seek wider application by leveraging the network effects generated by companies promoting these assets. The European Commission will create a comprehensive and holistic EU "stablecoin" framework for crypto assets not covered by existing EU financial services legislation to mitigate the risks identified by the Financial Stability Board, especially financial stability risks.

The plan still needs to be reviewed by the European Commission's legislative counterparts, the European Parliament and the European Council.

G20 Group and Financial Stability Board jointly released a stablecoin regulatory report

On October 23, the Financial Stability Board (FSB) released the report "Regulation, Supervision and Regulation of Global Stablecoin Arrangements", which put forward high-level recommendations for the regulation, supervision and supervision of "global stablecoin" (GSC) arrangements.

The FSB pointed out that so-called "stablecoins" are a specific type of crypto-assets that attempt to solve the high volatility of "traditional" crypto-assets by linking their value to one or more other assets (such as sovereign currencies). They have the potential to improve the efficiency of financial services provision, but at the same time may pose risks to financial stability, especially in the case of large-scale adoption. Stablecoins have the potential to improve payment efficiency and promote financial inclusion, but the use of "global stablecoins" (GSCs) may have a huge impact on the jurisdiction of many countries.

The FSB was established after the G20 summit in 2009. It is officially commissioned by the G20 to provide observation reports and policy recommendations for the global financial system. Its work is sponsored and led by the Bank for International Settlements.

The Group of Twenty (G20) is working with the International Monetary Fund (IMF), the World Bank, and the Bank for International Settlements (BIS) to discuss the complexity of global stablecoins in practice and technology, including design and interoperability, and to assess the potential and challenges of central bank digital currencies in cross-border payments. By the end of 2022, the G20 will complete the framework for regulating stablecoins and research on the design, technology, and trials of central bank digital currencies with the IMF, the World Bank, and the BIS ( source ).

IMF releases report: Central bank digital currencies have potential, but cannot solve all problems

Central bank digital currencies (CBDCs) could benefit countries that want to gain greater control over their monetary policy but are not a solution to all crises, according to a report released Oct. 16 by the International Monetary Fund (IMF).

The IMF pointed out that new digital forms of currency, including CBDC and global stablecoins (GSC), have attracted regulatory attention. CBDC and GSC can reduce transaction costs through competition, broaden service channels through mobile devices and promote financial inclusion. The cross-border use of digital currencies also brings risks and policy challenges. For countries with economic downturns, CBDC is not a panacea. It cannot save countries with high inflation or similar domestic problems.

The report concludes that CBDC has not yet fundamentally changed the global currency landscape, but may intensify currency substitution and currency internationalization effects. If the GSC has the same accounting unit as the existing currency, it may produce similar monetary effects as CBDC, while posing a potential threat to financial stability. If a new GSC with an independent accounting unit emerges (such as a new currency with a basket of currencies as reserves), it can also provide better financial services, but the impact on global currency and financial stability will be more far-reaching.

This is all for this issue of the MYKEY Stablecoin Report. Please pay attention to subsequent reports. We will provide you with more analysis on the development status, trends and international impact of stablecoins to help readers continuously update their understanding of the development of stablecoins.