Regulating stablecoin issuance: permissible entities and activities
Stablecoin rules vary widely, especially over who can issue stablecoins and what issuers can do beyond issuing them. Activities such as lending, staking and custody can increase risks and may require stronger safeguards.
Most frameworks focus issuers on core activities such as issuing stablecoins, handling redemptions and managing reserves. However, banks operating under existing banking rules may be allowed to do more because they are already subject to strict prudential oversight. Dedicated stablecoin regimes for non-banks generally set tighter limits.
Rules usually apply to the issuer, not the wider corporate group. Banks are already subject to group-level supervision, which makes it harder to shift risky activities to affiliates. Non-bank issuers often face fewer such controls, creating a potential loophole through corporate structures. Regulators may therefore need stronger group-level oversight for larger non-bank stablecoin issuers, especially when other activities within the group could increase risk. Featured image from: reddit.com
