Talk:Stablecoin

Please add link to MiCA legislation

Markets in Crypto-Assets legislation from EU is being implemented pn stablecoins. Please add a new Regulation heading and a paragraph:

The European Union passed the Markets in Crypto-Assets regulation (MiCA) in 2022. Regulations on stablecoins were expected to take effect in June 2024 and those affecting crypto asset service providers in the following December.

Ref: https://www.ft.com/content/78ebd5f9-dbb1-4dc6-84a8-1f8347bec535

Thank you. Yankinthebank (talk) 11:48, 5 July 2023 (UTC)

Extended-confirmed-protected edit request on 23 July 2023

This entry begins with " A stablecoin is a type of cryptocurrency where the value of the digital asset is supposed to be pegged to a reference asset, which is either fiat money, exchange-traded commodities (such as precious metals or industrial metals), or another cryptocurrency.[1]

In theory, 1:1 backing by a reference asset could make a stablecoin value track the value of the peg and not be subject to the radical changes in value common in the market for many digital assets.[2] In practice, however, stablecoin issuers have yet to be proven to maintain adequate reserves to support a stable value. " It would be preferable to begin the entry with a better framing of stablecoins:

"There is no universally agreed upon definition of a stablecoin. The cardinal feature of these crypto-assets is that they are designed with the primary purpose of maintaining a stable price relative to a specified asset, or a basket of assets (generally referred to as the peg). Beyond this common denominator, however, there is enormous diversity. RomanLegalScholar (talk) 16:00, 23 July 2023 (UTC)

References

I'm a bit confused by the language change proposed here (also your first source seems to be a malformed citation of several sources). You're suggesting the article should begin with "There is no universally agreed upon definition of a stablecoin" but then follow it up with a sentence that, in different language than the current opening sentence, essentially says the same thing as it—a stablecoin is cryptocurrency that is designed to have the same value as some reference asset.

I personally would shy away from opening the article with that sentence, since the opening is generally intended as a summary of the topic. It's pretty bad for a reader who knows nothing about the topic to get "there's no definition" as the first sentence, which tells them literally nothing. I think that holds even if there are several competing definitions (and that's especially true if they all more-or-less agree on the value-tracking bit that seems central here).

For the second bit, is the source stating that there's enormous diversity, or is the idea that from reading that source, you can draw the conclusion there's enormous diversity? The latter might be original research and it'd be preferable to cite literature which states the conclusion directly. Dylnuge ^{(Talk • Edits)} 05:29, 24 July 2023 (UTC)

I take your point. You are right. It is clearer to simply open with

"Stablecoins are crypto-assets is that they are designed with the primary purpose of maintaining a stable price relative to a specified asset, or a basket of assets (generally referred to as the peg).

With regard to the second sentence "Beyond this common denominator, however, there is enormous diversity." this is a direct quote from Bruce, Kara J. and Odinet, Christopher K. and Tosato, Andrea, The Private Law of Stablecoins (August 16, 2022). 54 Arizona State Law Journal 333 (2023), Available at SSRN: https://ssrn.com/abstract=4191646 or http://dx.doi.org/10.2139/ssrn.4191646.

The authors then go on to explain that there are many, different stablecoins in existence and that their diversity is best understood by looking at three elements "issuer", "peg" and "stabilization mechanism". This classification of stablecoins based on their components was originally developed by Amani Moin et al., A Classification Framework for Stablecoin Designs, Cornell U. & AVA Labs 1, 22–24 app. B (Sept. 18, 2019), https://arxiv.org/pdf/1910.10098.pdf

Amani et al actually provide the most extensive classification of stablecoins available to date.

If it were up to me, I would actually restructure this whole Stablecoins article on the basis of the Amani et al classification. RomanLegalScholar (talk) 16:07, 24 July 2023 (UTC)

Got it, thanks. Regarding "crypto-asset" here, it seems like that's language you prefer to "cryptocurrency" as currently used in the lede? I'm not an expert in this area and not entirely sure what the difference is, but currently crypto asset is a redirect to cryptocurrency and the latter seems to be the far more common term (ngrams: [3], page views: [4], Google trends: [5]). Is there a justification for using "crypto-asset" instead? Dylnuge ^{(Talk • Edits)} 20:58, 24 July 2023 (UTC)

Cryptocurrency works. There is a big academic debate surrounding the use of "cryto-asset" and "cryptocurrency". For the purpose of this entry "cryptocurrency" is fine.

My bigger suggestion is that stablecoins should be explained based on their components: at a minimum peg, issuer, stabilization mechanism. This approach has become dominant in academic writing. I think it really makes it much easier to understand stablecoins. The two papers I references above Bruce et al and Amani et al. are excellent in this respect. RomanLegalScholar (talk) 22:09, 26 July 2023 (UTC)

• We dont need a generally agreed upon definition here at wikipedia. We just follow what the WP:RS describe it as and summarize that in the WP:LEAD. Suggest if you want to create a section on defintions, you can do that in the article body and then we summarize that result in the LEAD. Thanks! Jtbobwaysf (talk) 10:08, 28 July 2023 (UTC)

  So the end result of this long discussion is that the text of the article remains unchanged. Moreover, the only reference provided is to a 2021 Bloomberg article...not exactly an authoritative source. Could we not, at a minimum, state that there are many different types of stablecoins and that they are very diverse in terms of "issuer", "peg" and "stabilization mechanisms" and providing references to:

  1) Amani Moin et al., A Classification Framework for Stablecoin Designs, Cornell U. & AVA Labs 1, 22–24 app. B (Sept. 18, 2019), https://arxiv.org/pdf/1910.10098.pdf

  2) Bruce, Kara J. and Odinet, Christopher K. and Tosato, Andrea, The Private Law of Stablecoins (August 16, 2022). 54 Arizona State Law Journal 333 (2023), Available at SSRN: https://ssrn.com/abstract=4191646 or http://dx.doi.org/10.2139/ssrn.4191646

  As it stands, the text is not very informative. It does help readers appreciate that stablecoins are an extremely diverse category of crypto assets. RomanLegalScholar (talk) 17:26, 23 February 2024 (UTC)

Extended-confirmed-protected edit request on 23 July 2023 (2)

In the Sub-section "Other Concerns" the following sub-heading should be added:

Insolvency Risk Stablecoin holders might be exposed to significant insolvency risk, depending on the legal structure adopted by their issuer. For example, holders of USDC would be deemed unsecured creditors in the event of Circle's bankruptcy and, thus, would be unlikely to obtain 1$ in return for their stablecoins. RomanLegalScholar (talk) 16:09, 23 July 2023 (UTC)

References

 Question: The cited article is paywalled and I could not obtain access to it. If you provide a short, direct quote from the source supporting your proposed edit, I should be able to use that to complete your request. Feel free to ping me when you have done so. Xan747 (talk) 15:35, 3 August 2023 (UTC)

Extended-confirmed-protected edit request on 12 August 2023

Change

Examples: TrueUSD (TUSD), USD Tether (USDT), USD Coin.

to

Examples: TrueUSD (TUSD), USD Tether (USDT), USD Coin, Monerium EURe . Alcuin MacAlcuin (talk) 20:52, 12 August 2023 (UTC)

 Not done@Alcuin MacAlcuin Blockworks.co is not a reliable source. -Lemonaka‎ 02:41, 13 August 2023 (UTC)

Thanks for reviewing @Lemonaka, there are multiple other sources to support the proposed edit, and I just resubmitted the proposed edit citing Techcrunch. Alcuin MacAlcuin (talk) 13:21, 13 August 2023 (UTC)

References

Extended-confirmed-protected edit request on 13 August 2023

Change

Examples: TrueUSD (TUSD), USD Tether (USDT), USD Coin.

to

Examples: TrueUSD (TUSD), USD Tether (USDT), USD Coin, Monerium EURe .

}} Alcuin MacAlcuin (talk) 13:20, 13 August 2023 (UTC)

 Not done for now: Could you please provide a different link to the source? The current one doesn't seem to link to the article. ARandomName123 (talk)^{Ping me!} 21:51, 18 August 2023 (UTC)

ARandomName123 Thanks for reviewing, typo in link has been corrected. Alcuin MacAlcuin (talk) 18:12, 25 August 2023 (UTC)

 Done ARandomName123 (talk)^{Ping me!} 00:42, 27 August 2023 (UTC)

References

Extended-confirmed-protected edit request on 13 October 2023

Under Reserve-backed stablecoins add a new type called Multi-asset-backed stablecoins with the description: A multi-asset-backed stablecoin is a type of stablecoin that is backed by multiple assets instead of just one. Instead of being pegged to a single reference asset like fiat money, precious metals, or another cryptocurrency, a multi-asset-backed stablecoin is designed to maintain a stable value by being backed by a diversified portfolio of different assets. This diversification can help mitigate risks and reduce volatility, making the stablecoin more resilient to market fluctuations. The specific assets backing a multi-asset-backed stablecoin can vary depending on the issuer's strategy and the design of the stablecoin. Examples of muti-asset-backed stablecoins are Gemini dollar (GUSD) and Libra. CryptoOracle (talk) 16:28, 13 October 2023 (UTC)

 Not done: please provide reliable sources that support the change you want to be made. ARandomName123 (talk)^{Ping me!} 02:21, 17 October 2023 (UTC)

Sure, note that Libra is now called Diem, here are sources:

“Diem vision”, Diem website, 2023

"Diem (digital currency)", Wikipedia, September 2023

“Facebook-backed Diem aims to launch digital currency pilot later this year”, CNBC, April 2021

“Why GUSD? - Always redeemable for USD”, Gemini website, 2023.

“What is Gemini Dollar (GUSD)?”, CoinDesk, May 2023 CryptoOracle (talk) 19:37, 30 December 2023 (UTC)

Your proposed wording is far, far too promotional to be acceptable, and the only source you provide which is even close to reliable is the CNBC one, which merely says ...as well as one multi-currency coin. with no other context or explanation. You need to provide a reliable source which directly supports the wording you wish to add. Grayfell (talk) 20:46, 30 December 2023 (UTC)

Fair enough, I seem to have missed the most important one:

WESTERBERG, HENRIK; "Design of a multi-asset-backed stablecoin and a multilateral order matching system" ; 2019, KTH ROYAL INSTITUTE OF TECHNOLOGY SCHOOL OF ELECTRICAL ENGINEERING AND COMPUTER SCIENCE. CryptoOracle (talk) 14:19, 4 January 2024 (UTC)

Merits

The merits section is an outright lie. The cited report says the quoted merits are not merits but problems:

Stablecoins present a host of potential challenges and risks for public policy, oversight and regulation, including legal certainty, sound governance, anti-money laundering and countering the financing of terrorism (AML/CFT) compliance, operational resilience (including for cyber security), consumer/investor and data protection, and tax compliance 73.93.174.109 (talk) 18:42, 7 April 2024 (UTC)

Extended-confirmed-protected edit request on 24 May 2024

In this sentence:

If the issuer of the stablecoin does not actually possess the fiat necessary to make exchanges, the stablecoin can quickly lose value and become worthless.

Please replace "does not actually possess" with "lacks", just to avoid wordiness. 123.51.107.94 (talk) 02:44, 24 May 2024 (UTC)

 Done Charliehdb (talk) 10:52, 24 May 2024 (UTC)