The Bank for International Settlements (BIS) recently released an executive summary on global stablecoin guidelines. This article will delve into the key points of the summary, providing valuable insights into the world of stablecoins and their potential impact on the global financial system.

Understanding Stablecoins

Before we delve into the guidelines, it’s crucial to understand what stablecoins are. Stablecoins are a type of cryptocurrency designed to minimize volatility. They achieve this by pegging their value to a reserve of assets, typically a fiat currency like the US dollar or a commodity like gold. This stability has made them increasingly popular in the world of digital finance.

The Need for Global Stablecoin Guidelines

As stablecoins gain popularity, they also attract the attention of regulatory bodies. The BIS, often referred to as the central bank for central banks, has recognized the need for a global framework to regulate these digital assets. The aim is to ensure that stablecoins operate in a manner that promotes financial stability and protects consumers and investors.

Key Points from the BIS Executive Summary

The executive summary released by the BIS outlines several key points that form the basis of the proposed global stablecoin guidelines. These include:

• Ensuring that stablecoin operations are transparent and predictable.
• Implementing robust systems to manage and mitigate risks associated with stablecoins.
• Ensuring that stablecoin issuers meet all regulatory requirements.
• Establishing a clear legal framework for stablecoin transactions.

Implications of the Guidelines

The proposed guidelines have several implications for the stablecoin industry. For one, they could lead to increased scrutiny of stablecoin operations, potentially leading to more robust and reliable systems. Additionally, they could also result in increased consumer and investor confidence in stablecoins, as they would be subject to the same regulatory standards as traditional financial instruments.

Examples of Stablecoin Regulation

Several countries have already begun implementing regulations for stablecoins. For instance, the US Office of the Comptroller of the Currency (OCC) has issued guidance allowing national banks to hold stablecoin reserves. Similarly, the UK’s Financial Conduct Authority (FCA) has issued a statement clarifying that stablecoins used in a manner akin to payment services must meet the same regulatory standards as other payment services.

Statistics on Stablecoin Usage

According to a report by the Blockchain Association, the total market capitalization of stablecoins exceeded $100 billion in May 2021. This represents a significant increase from just $11 billion in May 2020. This rapid growth underscores the need for robust global stablecoin guidelines.

Conclusion

The release of the BIS executive summary on global stablecoin guidelines marks a significant step towards the regulation of this burgeoning industry. By establishing a clear framework for stablecoin operations, the BIS aims to ensure that these digital assets can contribute positively to the global financial system while protecting consumers and investors. As the stablecoin industry continues to grow, these guidelines will play a crucial role in shaping its future.

Key Takeaways

The BIS executive summary on global stablecoin guidelines highlights the need for a clear regulatory framework for stablecoins. The proposed guidelines aim to ensure transparency, risk management, and legal clarity in stablecoin operations. With the rapid growth of the stablecoin industry, these guidelines could play a crucial role in shaping its future.

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This is an opinion editorial by Win Ko Ko Aung, a McCourt Scholar for Georgetown University’s Data Science for Public Policy program and a survivor of Myanmar’s 2021 military coup.

The Biden administration responded to the 2021 military coup in Myanmar (also known as Burma) with rapid implementation of economic sanctions, a significant measure that involved freezing $1 billion in funds held by the Myanmar government within the United States.

More than two years after the beginning of Myanmar’s Spring Revolution, which was born out of the violent overthrow of the civilian-elected government by the Myanmar military, the National Unity Government (NUG) — largely formed with elected officials from the 2020 Myanmar Election, representatives from ethnic organizations and anti-coup activists who have successfully escaped arrest attempts by the military — continues to seek avenues to access these frozen funds in order to accelerate the revolution effort.

And access to these funds appear to be desperately needed. In Myanmar, the aftermath of the 2021 overthrow has created a devastating situation. The military only had stable control of 17% of the territory of Myanmar and the rest of the country remains a battleground, with distressing attacks like an April airstrike that killed 100 villagers. More than 3,500 people have been killed and over 23,000 civilians imprisoned since the coup, highlighting the urgent need for humanitarian aid.

The United Nations estimates that 17.6 million people in Myanmar require assistance, a number equivalent to the population in need in Ukraine. But the United Nations’s Office for the Coordination of Humanitarian Affairs (OCHA) response plan reveals a significant disparity in funding for Myanmar compared to other countries facing issues of similar or lesser magnitudes. In my opinion, the plan falls significantly short, targeting only 5 million people out of the 17.6 million in need of assistance.

This underfunding highlights, on a global-policy level, the international community’s reluctance to provide substantial support for the Myanmar conflict. And this lack of assistance has had a profound impact on the people of Myanmar, who are struggling with the ongoing crisis.

In a recent analysis article from the United States Institute Of Peace, a group of Myanmar’s prominent figures stressed the shared courage, spirit and unity of the country’s people with Ukrainians in their fight for democracy. However, they also highlighted a significant disparity in the level of international assistance received by the two countries. While Ukraine has received substantial aid to counter Russian aggression, Myanmar’s struggle for democracy has not received comparable support. The authors pointed out that even a fraction of the aid received by Ukraine could have a profound impact on Myanmar’s efforts to unseat the military dictators and potentially shorten the duration of the conflict.

Furthermore, as Myanmar’s shadow government, NUG, faces another significant drawback on the international diplomatic frontline. Despite controlling 53% of Myanmar’s territory and opening the liaison office in Washington D.C. under the BURMA Act, the NUG is struggling to gain legitimacy and recognition from the United States. While the European Parliament has adopted a resolution “supporting” the NUG as the “legitimate representatives of the democratic wishes of the people of Myanmar” since October 2021, the struggle for similar recognition in the U.S. continues.

Funding Myanmar’s Struggle For Democracy

During this challenging period, and as it attempts to access funds frozen by the U.S., the NUG has explored alternative funding avenues. For instance, it has successfully raised millions of dollars from Myanmar nationals across the globe through creative approaches. The NUG’s ministry of planning, finance and investment (MOPFI) initiated virtual land sales, generating a remarkable $9 million in just two-and-a-half days. Additionally, the auction sale of the military dictator’s land bonds garnered $2 million within a span of three days.

As of early 2023, the NUG announced that it had accumulated over $132 million to support its efforts in undermining the military junta. Even more impressive is that this amount was primarily raised within the country of 54 million people, where the GDP per capita stands at a relatively-low $1,095, as well as only about 4.5 million people from Myanmar who now live abroad.

The NUG’s minister for planning, finance and investment, Tin Tun Naing, told The Straits Times that approximately 45% of the funds raised to date have been from the sale of so-called Spring Revolution special treasury bonds.

In addition to the recent establishment of an interim central bank by the NUG, this shadow government is also exploring natively-digital financial solutions to its problems. The recent soft-launch of the Spring Development Bank, which is backed by the Polygon blockchain, is such a step. According to an announcement event held in the Burmese language, attended by Minister Tin Tun Naing, the Spring Development Bank has received licensing and regulation from the interim central bank and is meant to enable transactions in four currencies: Myanmar kyats, United States dollars, Singapore dollars and Thai baht.

During a question and answer session at the announcement event, Tin Tun Naing noted that the NUG has a plan to channel international funding through the Spring Development Bank. He also mentioned that it is actively working toward recovering Myanmar’s $1 billion reserve frozen by the U.S. through legal means. He emphasized that he expects significant progress in this regard as the revolution gains clearer momentum.

While the NUG’s initial success in securing funding on its own is promising, it also demonstrates a hard reality: Myanmar’s struggle for democracy is being carried forward primarily by its own people, as the international community and aid donors have largely ignored the country’s struggles. And it demonstrates a need to embrace one of the world’s preeminent, sovereign financial tools in Bitcoin.

Myanmar Should Issue A Bitcoin Bond

Given the challenging circumstances and limited international support, the NUG should draw inspiration from initiatives like the Bitcoin bond introduced in El Salvador. The NUG could issue a digital “freedom bond” that can tap into a global pool of ideologically-aligned investors who want to support democracy in Myanmar. The innovative freedom bond approach could involve denominating a certain percentage of the frozen $1 billion reserve in the United States into bitcoin, while keeping the bonds denominated in USD. Additionally, the freedom bond could be designed with specific features, such as a predetermined interest rate and a lock period, to attract investors and provide them with incentives to support Myanmar’s struggle for democracy.

Furthermore, the NUG may explore the possibility of offering permanent residence status in the post-revolution era as an added benefit to potential investors. By combining these elements in the freedom bond strategy, the NUG could create an innovative and compelling investment opportunity that not only helps fund the democratization efforts but also provides investors with tangible bitcoin standard benefits and a sense of contribution to a meaningful cause. This strategic move could mark a defining moment for Myanmar’s journey toward democratic progress on the global stage, and overcome its significant diplomatic isolation.

After multiple attempts to contact the Tin Tun Naing for comment on this potential bitcoin standard, the NUG team has indicated that its central bank setup is currently its top priority. Once the establishment of the central bank is completed, however, it plans to explore establishing a bitcoin standard.

“Bitcoin in Myanmar is like the early internet era (2007-2008) in the country when the military junta Than Shwe ruled,” explained a representative from the Bitcoin Myanmar Initiative, a Burmese language educational platform, in response to questions for this article. “They brainwashed parents and teachers into believing the internet was just a dating place for teenagers and view(ing) adult content, and internet cafes were places where kids learned to smoke cigarettes. However, the brainwashing of the early internet era turned out to be false. Rather, it was a fear-based counter narrative to discourage the populace from embracing technology that would lead to a democratic information and open to the free world experience.”

The initiative believes that Myanmar is at a pivotal moment for Bitcoin adoption, comparable to the spread of the early internet over a decade ago.

“We think we are at the exact moment of Bitcoin adoption in Myanmar,” the representative stated.

While the concept of a bitcoin standard may seem futuristic for Myanmar, it has already gained attention and support from notable figures elsewhere. Robert F. Kennedy Jr., a 2024 U.S. presidential candidate, recently shared his Bitcoin-focused policy and highlighted the impact of Bitcoin on people’s movements worldwide, specifically mentioning “burma” in a recent tweet. Kennedy emphasized that Bitcoin technology has been a lifesaver for the country, suggesting its potential to bring positive change and transformation to Myanmar.

This is a guest post by Win Ko Ko Aung. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

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BlackRock, the world’s largest asset manager with nearly $9 trillion in assets under management, has made significant strides toward embracing bitcoin, as indicated by its recent filing for a spot bitcoin exchange-traded fund. The company’s decision to take steps to offer its clients exposure to the digital asset are likely to bring a surge of institutional adoption to the space.

The company also recently resubmitted their filing after the SEC responded that the initial filings required more information in regards to the exchange’s involved, subsequently adding Coinbase to the filing, as other firms refiling did.

And now, BlackRock’s CEO, Larry Fink, has made an appearance on Fox Business where he stated that the role of bitcoin and crypto is “digitizing gold.” 

“Instead of investing in gold as a hedge against inflation … or the devaluation of your currency … [bitcoin] can represent an asset that people can play as an alternative,” Fink stated. The description reinforces the perception of bitcoin as a store of value, akin to the role gold has traditionally played in investment portfolios. By likening bitcoin to gold, Fink acknowledges the international nature of the digital asset, highlighting its potential as a global store of wealth — and indeed, during his news appearance, Fink further emphasized that, “Bitcoin is an international asset.” 

The televised statement underscores the conviction Fink, and likely BlackRock, have in bitcoin and its potential role in the future. Fink’s recognition of bitcoin’s international appeal further bolsters the case for increased institutional interest and investment.

BlackRock’s pursuit of a Bitcoin ETF and Fink’s endorsement of bitcoin as digitized gold reflect a notable shift in the attitude of major financial institutions toward bitcoin. These developments suggest that BlackRock, along with other industry giants, recognizes the potential of bitcoin to reshape the financial landscape. 

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A Canadian economist and professor at the University of British Columbia says the role of the U.S. dollar in international trade and as a reserve currency has been declining. “Other currencies have been getting more important in international transactions and as reserve currencies,” he stressed.

Economist Highlights Rising De-Dollarization Trend

Canadian economist James Brander shared his thoughts on the worldwide de-dollarization trend and the waning influence of the U.S. dollar last week. Brander is an Asia Pacific professor in the Strategy and Business Economics Division of the University of British Columbia.

He explained that the U.S. dollar’s dominance in the global market is declining as a growing number of countries are opting to conduct their international transactions using local currencies instead of relying on the USD, Press TV reported. While noting that the U.S. dollar is “the major reserve currency” and “over half of all international currency reserves in the world are U.S. dollar reserves,” he said: “The role of the U.S. dollar has been declining. It’s still big, but it has been declining.” The economist added:

Other currencies have been getting more important in international transactions and as reserve currencies. Current geopolitical tensions have increased the move towards using other currencies … especially Russia, as well as China, and some other countries.

“More local currencies are being used for international transactions,” the professor reiterated. “So, we’ve got a transaction between India and Russia and that’s handled either in Indian currency or Russian currency. We’re seeing more of that instead of U.S. dollars. I don’t see a problem with that.”

The imposition of economic sanctions by the U.S., particularly on Russia, is widely viewed as a significant driving force for other nations to transition away from the USD. U.S. Treasury Secretary Janet Yellen stated last month: “There is a risk when we use financial sanctions that are linked to the role of the dollar that over time it could undermine the hegemony of the dollar … Of course, it does create a desire on the part of China, of Russia, of Iran to find an alternative.”

De-dollarization efforts have been gaining momentum among the BRICS nations (Brazil, Russia, India, China, and South Africa). The economic bloc is also working on creating a common currency that will help its members reduce their reliance on the U.S. dollar. The BRICS leaders are expected to discuss the matter at their upcoming leaders’ summit in August. In addition, 10 Southeast Asian nations recently agreed to encourage the use of national currencies in transactions.

Do you think the importance of the U.S. dollar in international trade and as a reserve currency is declining? Let us know in the comments section below.

Kevin Helms

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.