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The market capitalization of stablecoins reached $20.62 billion, Stablecoin regulatory policy of the United States

Original link: https://bihu.com/article/1915489812

Original publish time: September 30, 2020

Original author: HaiBo Jiang, researcher of MYKEY Lab

We released MYKEY Crypto Stablecoin Report to share our interpretation of the development status of stablecoins and analysis of their development trends to help the participants in the crypto market stay updated on the development status of stablecoin. The MYKEY Crypto Stablecoin Report will be published every week, looking forward to maintaining communication with the industry and exploring the development prospects of stablecoin together.

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  • The market capitalization of major stablecoins has increased by $757 million to $20.62 billion.
  • Last week, the circulation of USDT, USDC, and DAI increased by 150 million, 334 million, and 213 million.
  • OCC issued the regulations on stablecoins for the first time, confirming that the Commonwealth Bank can provide custody services for legal-collateralized stablecoins.
  • The bank has the right to deposit reserves of certain ‘stablecoin’, which refers to stablecoin collateralized 1:1 by the single legal currency.
  • The Bank verifies at least once a day that the balance in the reserve account is more than or equal to the amount of stablecoins outstanding with issuers.
  • FinHub encourages all parties involved in the construction and sale of digital assets to contact FinHub through the official website to help them ensure that such digital assets comply with the Federal Securities Act. If appropriate, a ‘no action’ position will be considered.

1. Overview of Stablecoin Data

First, let’s review the changes in the basic information of the various stablecoins in the past week(September 19, 2020 ~ September 25, 2020, same below).

Market Circulation

Source: MYKEY, CoinMarketCap, Coin Metrics

At present, the market capitalization of major stablecoins has increased by $757 million to $20.62 billion.

Source: MYKEY, Coin Metrics

In the past week, Tether additionally issued 150 million USDT on Ethereum. The circulation of USDC, DAI, BUSD, TUSD, and GUSD increased by 334 million, 213 million, 64.98 million, 490,000 and 570,000. The circulation of PAX and HUSD decreased by 1.09 million and 4.51 million.

The Number of Holding Addresses

Source: MYKEY, DeBank

Last week, the number of main stablecoin holding addresses on Ethereum all increased by 12,892.

Source: MYKEY, DeBank

The number of holding addresses of USDT, USDC, TUSD, and DAI increased by 4,714, 4,790, 329, and 3,311. The number of holding addresses of PAX decreased by 232.

The Number of Active Addresses

Source: MYKEY, Coin Metrics

The number of active addresses of stablecoins last week increased by an average of 8.98% compared to the previous week.

The Number of 24-hour Transactions on the Public Blockchains

Source: MYKEY, Coin Metrics

Compared with the previous week, the number of daily transactions of major stablecoins increased by an average of 3.1%.

The Number of 24-hour Volume of Transactions on the Public Blockchains

Source: MYKEY, Coin Metrics

Source: MYKEY, Coin Metrics

The daily volume of transactions of major stablecoins last week increased by an average of 0.74% from the previous week.

2. Stablecoin Regulatory Policy of the United States

As early as June, the OCC issued a ‘pre-notification of the proposed rulemaking’, asking the public to weigh how to use cryptocurrency and other financial technology tools in the financial sector before August 3. Several banks have indicated that they may be interested in providing crypto custody and other services to customers. Dominic Venturo, the chief digital officer of the National Association of American banks, said in response that the OCC should distinguish between utility tokens, stablecoins, and Exchange platform tokens.

Last week, the OCC issued regulations on stablecoins, confirming that the Commonwealth Bank can provide custody services for legal-collateralized stablecoins. This is the first time the OCC has issued regulations regarding stablecoins. The OCC is a federal agency responsible for overseeing the implementation of laws related to the National Bank and supervising the Federal Bank and the agencies of foreign banks. Subsequently, the SEC FinHub Staff stated that it could consider adopting a ‘no action’ position on specific digital asset activities under appropriate circumstances.

The OCC released regulations on stablecoins for the first time

On September 21, the OCC issued a press release and subsequent explanatory letter stating that banks have the right to deposit certain ‘stablecoins’ reserves. The stablecoin mentioned here specifically refers to stablecoin collateralized 1:1 by the single legal currency and does not include other stablecoins backed by commodities, cryptocurrencies, or other assets. The demand for stablecoins is increasing day by day, with multiple applications, such as large-scale transfers, which have great potential. Two technologies for realizing cryptocurrency, encryption technology and distributed ledger technology, are developing rapidly.

The National Bank has a clear authorization to accept deposits, which is also the core business of the bank. Certain stablecoin issuers may also wish to deposit the cash reserves supporting their issuance of stablecoins in the National Bank. As long as stablecoin issuers can effectively manage risks and comply with relevant laws (including the ‘Bank Secrecy Law’ and anti-money laundering laws), banks can provide services for their legitimate businesses, including cryptocurrency businesses. Therefore, banks may obtain deposits from stablecoin issuers, including stablecoin reserve deposits related to custodian wallets.

Like other deposits, stablecoin reserves are also subject to laws and regulations related to deposit insurance coverage. The stablecoin reserve account can be the deposit of a stablecoin issuer or the deposit of a single stablecoin holder. Banks and the FSA should provide accurate and appropriate disclosures on deposit insurance coverage to ensure compliance with the BSA and other regulations, including but not limited to the customer due diligence under the BSA, customer identification requirements under the Patriot Act, requirements under the Federal Securities Act, and identification of the beneficial owners of the accounts enabled.

Reserves related to stablecoins may bring significant liquidity risks. New banking activities should be developed and implemented under sound risk management principles, and banks should establish appropriate risk management procedures for the development of new businesses. OCC hopes that all banks manage liquidity risks at the same level as the risks they assume. The protocol between the bank and the stablecoin issuer may include restrictions or requirements for holding assets in the reserve account, and the protocol may stipulate the responsibilities of the parties. For example, the bank should sign an appropriate protocol with the issuer to ensure that the balance in the reserve account is more than or equal to the amount of stablecoins outstanding with issuers. The agreement should include a mechanism for the bank to periodically check the amount of outstanding stablecoin.

To summarize, national banks are authorized to deposit stablecoin reserves, subject to the following restrictions:

Only support stablecoin collateralized 1:1 by the single legal currency.
The Bank verifies at least once a day that the balance in the reserve account is more than or equal to the amount of stablecoins outstanding with issuers.
Banks should establish appropriate risk management procedures for the development of new businesses.
Banks must comply with all applicable laws and regulations.
Banks must establish appropriate control measures and conduct adequate due diligence.
The bank must confirm the beneficial owners of the accounts enabled.

The Statement of SEC

After the OCC issued the explanatory letter, the SEC FinHub Staff issued a statement.

According to the Federal Securities Law, whether a specific digital asset (including stablecoins) should be considered security depends on actual conditions. The nature of the asset needs to be carefully analyzed, including the right to hold the asset and how to provide and sell the asset.

SEC FinHub believes that as long as it meets the relevant registration, reporting, and other requirements of the Federal Securities Law, market participants may construct and sell digital assets in a way that does not constitute securities. However, the terms used to describe digital assets or financial activities involving digital assets may not be consistent with the definitions of SEC in relevant laws and regulations. FinHub encourages all parties involved in the construction and sale of digital assets to contact FinHub through the official website to help them ensure that such digital assets can comply with the Federal Securities Act. FinHub staff will always be ready to assist participants. If appropriate, a ‘no action’ position will be considered.

Tips

To better communicate with industry insiders, we decided to add two sections for questions of readers and opinions of guests. If readers have questions about stablecoins, please contact us. We will pick meaningful questions to answer in the next issue. At the same time, welcome guests from the industry to share your views on stablecoins. Contact information: jianghb@mykey.org.

This is what we’re sharing in this MYKEY Crypto Stablecoin Report, welcome to stay tuned for follow-up crypto stablecoin reports. Starting from the next crypto stablecoin report, the format of this report will be changed from weekly to monthly, that is, the 21st stablecoin report will cover the development of stablecoins in October 2020. We will provide more interpretations of the development status of stablecoins and analysis of their development trends to help readers stay updated on the development status of stablecoin in the follow-up report.

PS: MYKEY Lab has the final right to interpret the content of the article, please indicate the source for the quotation. Welcome to follow our official account — MYKEY Lab: MYKEY Smart Wallet.

Past review

Crypto Stablecoin Report 15: The market capitalization of stablecoins increased to $15.961 billion, On-chain usage of stablecoins

Crypto Stablecoin Report 16: The connection between stablecoins and real assets

Crypto Stablecoin Report 17: The market capitalization of stablecoins increased to $17.544 billion, Decentralized payment protocol Celo

The market capitalization of stablecoins increased to $18.53 billion, The rise of CBDC

The market capitalization of stablecoins reached $19.86 billion, The latest development of several decentralized stablecoin protocols

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