Stablecoins explained

The European Central Bank is the leading bank which has the main role to maintain price stability in 19 European Union countries out of the 28 member states. This is where the discussion on stablecoins cryptocurrencies is key.

To begin, Stablecoins are based on the concept of digital money. This is reflective upon the stablecoins being attached to a different stable asset which shows the characterises of control. This allows digital representations to be processed in three different ways:

• Transferred
• Stored or
• Electronically

One area for discussion is based on the current law where there are variety of terms which can often be difficult to grasp. For example the label Stablecoins is unhelpful, said the Financial Conduct Authority, which this shows the concept is very limited. This then led to a current change in the label which is now called “cyrptoasset” which is useful as there are no elements of bias presented. From the current existing label this has helped many to identify the wider range of tokens available.

There are possible risk assessments involved which must be carried out by the European System of Central Banks to allow the process of payment to be made effective. This helps to ensure if any issues arise they can be dealt with immediately. Therefore it must be in the the best interest to allow customers to become influenced to achieve a world-wide footprint. This would help to demonstrate and establish that relevant authorities need be aware of any surrounding issues presented.

Currently there are a variety of tokens which can help to understand the means of exchange and the concept of the interest of a business through examples of profit sharing. In respect of goods and services this gives the a business the power and authority to issue the relevant tokens. For example accepting as preferred method of payment. Therefore it is important that the same rule is applied throughout for stablecoin and other financial products to ensure a completion is successful stated by the principle “same business, same risks and same rules”.

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