Recovery and Resolution Planning for Stablecoins

How could Recovery and Resolution Planning (RRP) for Stablecoins look like? This thesis will discuss Recovery and Resolution Planning (RRP) for Stablecoins and consider RRP for single-fiat Stablecoin (SC), single-fiat currency SC and multi-fiat SC in light of the recommendations of the international Financial Stability Board (FSB). The author provides a detailed insight into Stablecoins: from the Stablecoin`s definition to its complex key components, its objectives for RRP and its attached challenges.

Vanessa Dutzi is a graduate of LL.M. International Business Law degree at University of Zurich UZH and Dipl. iur., MLaw degree at Goethe University Frankfurt am Main. Since June 2021 she works in international financial markets with specialization on banking and Financial Market Infrastructures (FMI) regulations at KPMG Switzerland. Crucially, she was involved in the review of the Swiss Banking Act (BA), has recently worked in an internationally well-known crypto currency project and on several international bank and FMI regulations or legislations related governmental projects. Previously, the author worked in the Central Area law - International law (ESZB, Monetary and Central Banking law) at Deutsche Bundesbank Frankfurt a.M., in the International Finance & Regulatory department at Ashurst Frankfurt LL.P. and the International Affairs & Policy Issues department at the Swiss Financial Markets Authority FINMA Zurich.

Contents

A. What is a stablecoin?

I. Definition

II. Types of stablecoin
1. Single-fiat currency stablecoin
2. Single-fiat stablecoin
3. Multi-fiat stablecoin

III. Key components of stablecoins
1. Stabilisation mechanism
2. Technology and interoperable surface
3. SC ecosystem

IV. Comparison to the other digital forms of money
1. Central Bank Digital Currency
2. Cryptocurrency / Crypto token / Cryptoasset

B. Why Recovery and Resolution Planning for stablecoins

I. What is a Recovery Plan and what is a Resolution Plan?
1. The Recovery Plan and its objective
2. The Resolution Plan and its objective

II. The third in group: The Voluntary Exit Plan and its objective

III. Why is Recovery and Resolution planning needed for stablecoins?
1. FSB Recommendation
2. Risks and vulnerabilities of stablecoins
3. Approvability of a stablecoin

IV. What are the objectives of Recovery and Resolution planning for stablecoins?
1. Stability and functioning of financial markets through maintaining or winding down in an orderly manner any critical payment and other functions that stablecoin provide
2. Economic function and "safe investment"

V. Challenges for Recovery and Resolution planning for stablecoins
1. Cross-border Challenges: Where functions are provided by different providers located in different jurisdictions
2. Absence of a safety net for stablecoins, of deposit insurance and investor protection to protect users