Stablecoins: Types and Applications

8 Pages Posted: 3 Apr 2020

See all articles by Galia Kondova

Galia Kondova

School of Business FHNW

Christian Bolliger

FHNW School of Business

Erich Thammavongsa

affiliation not provided to SSRN

Date Written: March 12, 2020

Abstract

Stablecoins are digital tokens that aim at “stabilising major currencies directly in the market for cryptoassets”. Stablecoins are built on a set of stabilization tools that classify them as tokenized funds, off-chain collateralized, on-chain collateralized and algorithmic. The paper provides a detailed overview of the different stabilization mechanisms supported by examples of international market applications. In addition, the paper distinguishes between private-issued and state-issued stablecoins and discusses current developments in Switzerland and China. Finally, the paper concludes with a discussion on the major advantages and challenges related to the implementation of stablecoins. The paper recognizes the advantages of stablecoins for the underbanked people and cross-border payments as well as acknowledges the challenges related to the establishment of an internationally-coordinated legal framework and enforcement on stablecoins.

Keywords: blockchain, stablecoins, digital currencies, digital assets

JEL Classification: O54, P48

Suggested Citation

Kondova, Galia and Bolliger, Christian and Thammavongsa, Erich, Stablecoins: Types and Applications (March 12, 2020). Available at SSRN: https://ssrn.com/abstract=3553296

Galia Kondova (Contact Author)

School of Business FHNW ( email )

Peter Merian-Strasse 86
Basel, 4002
Switzerland

Christian Bolliger

FHNW School of Business ( email )

Peter Merian-Strasse 86
Basel, 4002
Switzerland

Erich Thammavongsa

affiliation not provided to SSRN

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