Stablecoins: convergent rules on the surface, divergent regimes in practice

Seven jurisdictions have now legislated for stablecoins. Read side by side, their rules look surprisingly alike: full or near-full backing in liquid assets, segregated reserves, the exclusion of algorithmic instruments, and the prohibition of yield to holders. What diverges  is twofold: the political and supervisory interpretation these rules receive, most visibly in how foreign-issued stablecoins are treated; and the redistributive weight of choices presented as technical, most notably the composition of reserves.

This ECRI In-Depth Analysis paper compares the EU, US, UK, Hong Kong, Singapore, Japan and the United Arab Emirates along four dimensions: the treatment of foreign-issued tokens, reserve composition, the choice between anchoring stablecoins in pre-existing legislation and creating new categories, and what each regime includes within and excludes from its perimeter.

The paper concludes with three policy recommendations: that a structured framework for mutual recognition should be built, one that is grounded in graduated and proportionate restrictions rather than blanket exclusion; that the redistributive consequences of reserve composition should be made explicit in the policy debate rather than buried in prudential rule-making; and the need to address the prohibition of yield to holders as the substantive policy choice it is, on a coordinated basis across jurisdictions, rather than through the indirect channel of reserve rules.

Judith Arnal is Associate Senior Research Fellow at ECRI and CEPS.