Stablecoins are an integral part of the digital assets ecosystem, but as a number of events between 2022 and 2023 have shown, they are not necessarily stable. Users of Stablecoins must feel confident the reserves backing their Stablecoins actually exist and that they may be able to redeem their Stablecoins on demand. The Digital Economy Initiative looks at how Stablecoins can be classified and proposes a Capital and Liquidity framework for Stablecoins from a UK perspective to ensure that users are able to have access to their assets upon request.
A Proposal for a U.K. Capital and Liquidity Framework for Stablecoin Issuers
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