While they charge fees, their business model is similar to the potentially far more profitable one of traditional fractional reserve banks. They are typically supported on multiple public blockchains, are usable in blockchain applications, and can have a near-real-time, low-cost, peer-to-peer global settlement.Į-money token issuers are not custodial broker-dealers, making their revenue from transaction fees. They do not pay interest – positive or negative. Issuers of e-money tokens offer to redeem them one-to-one with a matching fiat currency and claim that their reserves fully back them. Following the European Commission, we refer to these stablecoins as e-money tokens. It is not surprising that they currently make up over 90% of the total supply. Fiat-currency-backed stablecoins are the only stablecoins that are practical decentralised-ledger-technology money for the real economy and DeFi. Tokens pegged to a commodity, typically gold.Ĭrypto-backed stablecoins are too risky algorithmic stablecoins are run-prone commodity-backed stablecoins have only a niche role (see Chaudhary and Viswanath-Natraj 2022 and Landau 2022).Unbacked tokens pegged to an external reference asset where the issuer uses a ‘mint-and-burn’ algorithm to maintain parity.Tokens backed by another cryptocurrency where the issuer holds excess reserves to maintain their value (over-collateralisation).Tokens pegged to a fiat currency where the issuer holds reserves to maintain their value.2Ī problem for this nascent market, however, is that the European Commission’s proposed regulation of stablecoins may have the effect of dooming them in their current form. The supply has burgeoned from $5.89 billion at the start of 202 to $143.68 billion on 20 July 2022. Consequently, stablecoins – cryptocurrencies with a market value pegged to some external reference asset or assets – have taken off. Central bank digital currencies might be an option, but these may not use a decentralised ledger technology, may not be meant for retail customers, and are slow to materialise in advanced economies. Participants in the real economy and the rapidly growing world of decentralised finance (DeFi) need a digital currency with a more stable value. However, its value is notoriously volatile, making it an unappealing medium of exchange. MAS does not prescribe any particular technology for multi-factor authentication, so that banks can offer the authentication method that best meets their customers’ preferences.Ģ. Authentication mechanisms that banks offer include hardware tokens, digital tokens, and biometrics. Banks which have replaced hardware tokens with digital tokens have published customer advisories and trained their frontline staff to provide guidance to customers on the use of digital tokens.ģ. While banks like DBS, OCBC and UOB have stopped issuing hardware tokens by default to customers who apply for internet banking, their customers can request for hardware tokens if they prefer this method of authentication.Decentralised ledger technology-based cryptocurrency is highly secure and allows for a near-real-time peer-to-peer global settlement. MAS requires banks to implement multi-factor authentication to verify customer identity and authorise online transactions.
To ask the Prime Minister whether banks should be required to continue issuing physical tokens to access mobile and digital banking services for those who prefer that method of access, particularly those less technologically savvy or who do not have the means to purchase the later models of phones which have the necessary operating systems to allow digital tokens.Īnswer by Mr Tharman Shanmugaratnam, Senior Minister and Minister in charge of MAS:ġ. Mr Christopher de Souza, MP, Holland-Bukit Timah GRC Name and Constituency of Member of Parliament World’s largest festival for the FinTech community to connect, collaborate and co-createįast track intellectual property protection through various initiativesĪ collaborative AI-driven global solutions hub to foster SME digitalisationįind out how Singapore can be a leading centre for Green and Sustainable Finance Industry collaboration that explores blockchain’s usage for Central Bank Digital Currency Understand the various initiatives for technology solutions and projects in Green Finance. World’s first open architecture platform for FIs to discover FinTechs and deploy solutions Various payment initiatives including SGQR, FAST and PayNow Sandbox relaxes regulatory requirements to enable live experiments of innovation Get funding on proof-of-concepts, hiring, business development and more Latest information on MAS’ FinTech strategy, initiatives and funding schemes
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