Legal Problems and Solutions in Stablecoins: A Multi-Disciplinary Approach Applied to Euro Stablecoins

Abstract

An increasingly important form of electronic currency is the ‘stablecoin’. Unlike other high-profile ‘cryptocurrencies’, such as Bitcoin, stablecoins claim to be matched by a corresponding amount of secure assets in a national currency to which the stablecoin can be converted at par. These crypto-assets, however, create significant legal and economic problems. Notably, issues about trust in both issuers and backing assets, the risk of runs, and particular challenges associated with public and private law regimes resist the adoption of stablecoin both in Europe and beyond. This article draws from previous experiences to analyse these issues and propose solutions. Taking a multi-disciplinary approach, the article argues that the legal and economic issues surrounding today’s stablecoins could be addressed using the lessons from prior centuries.