Dr. Bhaskar Dasgupta, Chairman, Middle East Stablecoin Association
Disentangling Asset Liabilities from Infrastructure Performance
A Federal Reserve Board paper titled The Fragility of Perfectly Safe Digital Money underscores a critical distinction in digital finance: a stablecoin liability may be fully backed by high-quality liquid assets, yet its settlement rail can still experience operational fragility. If a stablecoin operates on a congested permissionless blockchain where transaction fees spike during market volatility, users may abandon the rail regardless of the underlying reserve quality. Regulatory oversight must evaluate both the safety of the asset and the resilience of the network carrying it.
Establishing Financial Market Infrastructure Standards in the UAE
To support international trade, remittances, capital markets, and corporate treasury management, stablecoins must be evaluated as full financial market infrastructure. Regulatory frameworks across the Central Bank, ADGM, DIFC, and VARA must encompass standards for issuance, reserves, redemption, custody, and interoperability alongside operational resilience for the underlying settlement networks. Ensuring rails function reliably during periods of market stress is essential for long-term financial stability.
Settlement Fragility: Separating Reserve Safety from Blockchain Rail Quality
Dr. Bhaskar Dasgupta, Chairman, Middle East Stablecoin Association
Disentangling Asset Liabilities from Infrastructure Performance
A Federal Reserve Board paper titled The Fragility of Perfectly Safe Digital Money underscores a critical distinction in digital finance: a stablecoin liability may be fully backed by high-quality liquid assets, yet its settlement rail can still experience operational fragility. If a stablecoin operates on a congested permissionless blockchain where transaction fees spike during market volatility, users may abandon the rail regardless of the underlying reserve quality. Regulatory oversight must evaluate both the safety of the asset and the resilience of the network carrying it.
Establishing Financial Market Infrastructure Standards in the UAE
To support international trade, remittances, capital markets, and corporate treasury management, stablecoins must be evaluated as full financial market infrastructure. Regulatory frameworks across the Central Bank, ADGM, DIFC, and VARA must encompass standards for issuance, reserves, redemption, custody, and interoperability alongside operational resilience for the underlying settlement networks. Ensuring rails function reliably during periods of market stress is essential for long-term financial stability.