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22 N.Y.U. J. Legis. & Pub. Pol'y 1 (2019-2020)
Stablecoins in Cryptoeconomics from Initial Coin Offerings to Central Bank Digital Currencies

handle is hein.journals/nyulpp22 and id is 1 raw text is: 














  STABLECOINS IN CRYPTOECONOMICS:

     FROM INITIAL COIN OFFERINGS TO

  CENTRAL BANK DIGITAL CURRENCIES

                            Marco   Dell'Erba*

         Cryptocurrencies have suffered from tremendous volatility. As a result,
    cryptocurrencies cannot adequately serve the needs generally associated
    with currencies: to serve as a store of value as well as a medium of ex-
    change  and a unit of account. For this reason, developers and entrepre-
    neurs  have started to design an  alternative form of currency called
    stablecoins. A stablecoin is a stable cryptocurrency, pegged to fiat cur-
    rencies such as the U.S. dollar and Euro. Stablecoins are stabilized (in prin-
    ciple) by either being backed by collateral (such as fiat currency, precious
    metal, or a basket of cryptocurrencies) or with algorithmic seigniorage
    mechanisms.
         This Article analyzes stablecoins' main characteristics, identifies the
    different types of stablecoins, and considers stablecoins' role in cryptoeco-
    nomics  and their potential to revolutionize distributed ledger technology.
    Furthermore, this Article builds on the problems affecting stablecoins, fo-
    cusing in particular on: the apparent contradiction in implementing a fully
    decentralized system that is based on a central validator; the endemic
    opaqueness  of auditing operations; conflicts of interest emerging from st-
    ablecoins' relationship with cryptoexchanges; and their role in the recent
    Bitcoin bubble. Finally, this Article highlights the regulatory uncertainty
    that exists in securities and commodities law, which may cause stablecoins
    to be characterized in the same way as initial coin offerings (ICOs) and
    motivate governments and central bankers to design and effectively imple-
    ment  central bank digital currencies (CBDCs). More broadly, this Article
    aims to highlight the factual interconnections linking ICOs, cryptocurren-
    cies, stablecoins and CBDCs.


INTRODUCTION     .............................................. ....    2     R
     I.  WHAT   IS A  STABLECOIN? ............................ ..          7               R


   *  Assistant Professor of Law, University of Zurich, Fellow, NYU School of
Law's Institute for Corporate Governance and Finance, Research Associate, Financial
Regulation Laboratory of Excellence, University of Paris I Pantheon-Sorbonne. I am
grateful to Professors Jennifer Arlen, Geoffrey P. Miller, Edward B. Rock, Drew
Hinkes, Alan  N. Rechtschaffen and Alain Pietrancosta. I want to thank Robert
Dilworth (Bank of America Merrill Lynch), Stratos Pahis (NYU), Paul Linden-Retek
(Yale, NYU) and Thalia Lamping (Clifford Chance) for their suggestions. I truly ap-
preciate the interactions and the comments I received from the editors of this journal,
in particular Stephen Nemec. Finally, I am deeply grateful to the Hauser Program
(NYU  School of Law) and its promoters for their support and the interest in my work
over the past two years.

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Imaged with Permission of N.Y.U. Journal of Legislation and Public Policy

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