Depth | The fiat digital currency elephant dances, the industry is changing

Summary

The scale of the stablecoin market is accelerating, forming a "one super and many strong" competition pattern led by USDT. In 2019, the three major cryptocurrency exchanges and corporate giants have entered the game. 1) As of December 31, 2019, there were about 66 open and active circulating stablecoins. According to the different anchors, stablecoins can be roughly divided into three types: off-chain asset collateral, on-chain asset collateral, and algorithmic. Among them, off-chain assets (legal currency or commodity guarantees) are the most popular forms of collateral for stablecoin projects.In addition, the stablecoin linked to the US dollar is the most active, popular, and has the lowest failure rate, and 67% of closed stablecoins and Gold peg. 2) The stablecoin market is developing rapidly. As of December 31, 2019, the total size of the stablecoin market was approximately USD 5.83 billion, and market circulation increased by 313.48% from January 1, 2018 to December 31, 2019. 3) USDT's stablecoin market share reached 81.65%, which is far ahead. USDC, PAX, TUSD, DAI and other emerging stablecoins are competing positively, contributing to the "one super multi-strong" stablecoin pattern. 4) In 2019, the three major cryptocurrency exchanges OKEx, Binance, Huobi, and corporate giants led by JP Morgan Chase, Facebook, Wal-Mart, etc. have entered the stablecoin market. The stable coin market is turbulent, and various types of "head" stable coins show their magic. 1) USDT is the only company in the world. The focus of the issuance platform has been shifted to Ethereum. Due to the misappropriation of funds, a crisis of trust has arisen. The USDT hearing has attracted worldwide attention. 2) The USDC stablecoin market value ranks second, and the cryptocurrency exchange Coinbase plans to expand USDC transactions to 85 countries around the world. 3) PAX is the world's first compliant stablecoin, widely recognized and accepted by the market, and the stablecoin market value ranks third. 4) TUSD is the first stablecoin issued by the government to guarantee compliance and transparency in practice and exploration ahead of other stablecoins. 5) DAI is a crypto asset-collateralized stablecoin. In November 2019, the multi-collateral DAI was launched, which is more expansive and open than the original single-collateral DAI.

The international community is cautious about stablecoins and is alert to risks to accelerate research. 1) G7, the European Union, and the US Federal Reserve have publicly stated that global stablecoins are not allowed to operate until laws, regulations, and risks are fully identified and resolved. 2) The G20, the Financial Action Task Force on Anti-Money Laundering (FATF), the Dutch Central Bank (NDC), the European Central Bank and other organizations believe that there are a series of risks and problems with stablecoins, and further supervision and vigilance are needed. 3) To cope with the challenges brought by stablecoins, China has accelerated research on the central bank's digital currency (DCEP), and the US Financial Crimes Enforcement Network (FinCEN) has included stablecoins into the scope of supervision and actively adopted countermeasures.

Looking ahead to 2020, 1) As more and more institutions and funds enter the cryptocurrency field, we expect the stablecoin market size to continue to expand in 2020. 2) With the further development of infrastructure such as public chains, and the landing of various applications and financial services on the chain, in the long run, competition between various types of stable coins may begin in terms of application scenarios. 3) Achieving security and credibility under regulatory compliance has become the primary issue that needs to be addressed in the development of stablecoins. 4) Once governments of all countries start accepting or issuing central bank digital currencies, competition from central bank digital currencies outside the currency circle is bound to reshuffle the existing stablecoin landscape. From an industry perspective, stablecoins have clearly become a bridge between the digital world and the real world. With the entry of central bank digital currencies, the industry will also usher in a shuffle. From an investment perspective, the central bank's digital currency will be an important theme in 2020, and it has great imagination for the reshaping of the digital economy. It is recommended to pay attention to related subjects such as Sifang Jingchuang, Changliang Technology, Feitian Integrity, Gao Weida, and Jincai Internet.

Risk Warning: The progress of the development of blockchain technology is not up to expectations, the implementation of the business model of the blockchain is not up to expectations, the price of digital assets is too volatile, and the implementation of regulatory policies is less than expected.

The era of digital cryptocurrencies is on the rise, but the volatility of cryptocurrencies brings huge risks, and it also severely hinders the development of blockchain-based loans, derivatives, and other long-term smart contracts that require price stability. In order to reduce the risk caused by the excessive fluctuation of digital currencies, stablecoins were born. Stablecoins originated from USDT issued by Tether Limited, which was established by Bitfinex in 2014, and is generally considered to be a cryptocurrency with stable value. Its value is anchored in fiat currency or other assets, and it is designed to avoid other entirely by The volatility inherent in market-driven price cryptocurrencies. The central bank's digital currency is actually a digital fiat currency, which is essentially the same as cash in circulation, but in a different form, so it is not a stable currency, so this report is not included.
1 Overview of stablecoin development in 2019
1.1 The number has surged and there are about 66 open and active circulating stablecoin projects. Since the USDT wassuance in November 2014, stablecoin projects have increased year by year. As of December 31, 2019, about 66, more than half were issued in 2018, and of all stable coins that have been launched, more than 50% of active stable coins have been developed on the Ethereum network. The United States and Europe are the most popular main battlefields of the stablecoin team. The scale of stablecoins issued and circulated is far ahead. Among them, the United States, as the earliest initiator of stablecoins, has a clear advantage in the number of stablecoins.
As for the stablecoins in the market, they can be roughly divided into three categories: off-chain asset-backed stablecoins, on-chain asset-backed stablecoins, and algorithmic stablecoins. The first type is the off-chain asset-backed stablecoins, that is, the stablecoins have assets such as fiat currency, gold, or other pledged commodities as "support". The central entity guarantees the issuance and redemption of stablecoins with assets held by it as collateral, such as USDT, TUSD, GUSD, PAX, etc. The second type is on-chain asset-collateralized stablecoins. The collateral that supports stablecoins is itself a cryptocurrency. Blockchain users will mortgage digital assets such as cryptocurrencies, and issue a certain number of stable coins based on the value of the mortgaged assets, such as DAI, STEEM, Alchemint, etc. The third type is algorithmic stablecoin. This type of stablecoin does not have any external collateral to provide guarantee for it. Its value is maintained based on an algorithm, such as Terra, Ampleforth, Basis, Carbon, etc.

According to a recent Blockdata report, off-chain assets (legal currency or commodity guarantees) are the most popular form of collateral for stablecoin projects.In addition, the stablecoin linked to the US dollar is the most active, popular, and has the lowest failure rate, and the stability of failure 67% of the coins are linked to gold.

1.2 The liquidity has accelerated, the USDT market share is far ahead of the stablecoin market , and USDT is the largest. As of December 31, 2019, the total market value of cryptocurrencies was approximately US $ 193.296 billion, and the total market size of stablecoins was approximately US $ 5.83 billion, accounting for 3.02% of the total market value of cryptocurrencies, of which USDT's total market share was the first, USD 4.76 billion, accounting for approximately 81.65%. The market shares of USDC, PAX, TUSD, and DAI occupy the second to fifth positions respectively, accounting for approximately 8.94%, 3.88%, 2.66%, and 1.02%, forming a "super-multi-strong" The stablecoin pattern.
The circulation of the stablecoin market accelerated. From USD 1.41 billion on January 1, 2018 to USD 2.76 billion on January 1, 2019 to USD 5.83 billion on December 31, the growth rates were 95.74% and 111.23%, respectively, while January 1, 2018 As of December 31, 2019, it has increased by 313.48%. Among them, USDT has occupied the bulk of the stablecoin circulation market. From Q4 2018, the number of stablecoin items on the market has clearly increased.
The price of stablecoins remained basically stable. Stablecoin tracking error refers to the standard deviation of the recent stablecoin premium rate, which is used to reflect the recent deviation of the value of the stablecoin from the anchor. The larger the tracking error, the more likely the stablecoin deviates from the value of the anchor. From November 25 to December 25, 2019, the tracking error of stablecoins represented by USDT, USDC, TUSD, and PAX within 30 days has basically remained between 0.12% and 0.42%.
1.3 Three major cryptocurrency exchanges and corporate giants entered the stablecoin market In 2019, the three major cryptocurrency exchanges OKEx, Binance, and Huobi have gradually entered the stablecoin market. On June 3, OKEx announced the world's first stablecoin USDK. USDK is a stablecoin based on blockchain and trust licenses. It is an ERC-20 digital asset jointly launched by OKLink and Prime Trust. It operates on the Ethereum blockchain and is issued and redeemed for $ 1. The assets held are guaranteed on a 1: 1 basis. Ten days after the launch of USDK, on ​​June 13, Bitfinex officially launched OKEx Global Points OKB and USD stablecoin USDK, and opened mainstream trading pairs for these two currencies. On June 17, Binance launched its Bitcoin-anchored token (BTCB) on its public chain Binance Chain. It is reported that BTCB will be 100% supported by BTC in the reserve. This token can be used for trading on Binance, and it is planned to be used on Binance decentralized exchanges in the future. On August 19, Binance announced that it would launch an open blockchain project called "Venus", focusing on the development of localized stablecoins globally. On September 15, Binance announced the joint launch of the USD-linked stablecoin BUSD with Paxos Trust, and was approved by the New York State Financial Services Authority (NYDFS).

On July 17, Huobi issued an announcement saying that HUSD would be upgraded to a compliant USD stablecoin HUSD Token. HUSD Token is a stable and stable coin issued by Huobi Capital Investment based on Stable Universal and Paxos Trust based on ERC20 cooperation. It is anchored with USD 1: 1, and USD assets are hosted by Paxos Trust, a US licensed trust company. Third-party audit of funds.

At the same time, in 2019, major corporate giants frequently act on stablecoins. JP Morgan, Facebook, Wal-Mart and other companies have entered the stablecoin.

2 Analysis of the "head" stablecoin in 2019
On September 10, 2018, the New York Financial Services Authority (NYDFS) simultaneously approved Gemini Dollar (GUSD), a stablecoin issued by Gemini Trust, and Paxos Standard (PAX), a stablecoin issued by Paxos Trust. Ever since. As of December 31, 2019, three types of stable currencies, GUSD, PAX, and BUSD, have been approved by NYDFS.
2.1 USDT: The head effect is the most obvious. The hearing will raise concerns that USDT is a fiat-collateralized stablecoin that plans to 1: 1 anchor the US dollar. It was issued by Tether and was first issued on the Omni platform in 2014. It is currently circulating in Omni, Ethereum, TRON and other networks. Each USDT is supported by U.S. dollars reserved by Tether Ltd., anchored at 1: 1 USD, and can be redeemed through the Tether platform. The parent companies of Tether and Bitfinex Exchange are iFinex companies registered in Hong Kong. As the stable currency with the largest market capitalization, turnover, and highest investor acceptance in the current cryptocurrency market, USDT was in October 2018 and 2019. In April of this year, two trust crises were triggered due to possible insufficient reserves and misappropriation of funds. Among all current stablecoin projects, Tether's head effect is the most obvious. As of December 31, 2019, UDST had a market value of approximately 4.76 billion US dollars, ranking first in the stablecoin market and sixth in the cryptocurrency market, with a 24-hour trading volume of approximately 24.385 billion US dollars. The market value of USDT has risen sharply since the beginning of 2018. Although it declined from October to November 2018, the overall upward trend is obvious. From January 1, 2018 to December 31, 2019, it has increased by 239.5%, a single year in 2019. Up 151.85%. Most stablecoins are mainly circulated on the exchanges. Although there is a phenomenon of exchange volume, you can still intuitively feel that the acceptance of USDT is much higher than other stablecoin projects.
As of December 31, 2019, USDT has been issued on five platforms: Omni, Ethereum, TRON, EOS, and Liquid, with a total issued volume of approximately 4.777 billion. The circulation of USDT on Ethereum has exceeded that of Omni, which is 2.299 billion, and the circulation of other platforms, Omni, TRON, EOS, and Liquid are 1.555 billion, 917 million, 525.1 million, and 16.561 million.
USDT distribution platform's focus shifted to Ethereum. The USDT was mainly issued on the Omni platform in the early stage, and the situation reversed in August 2019. The daily transaction volume and daily transaction volume of ERC20-USDT exceeded OMNI-USDT. The additional issue period on Omni was mainly from July 2017 to January 2018, and then four additional issues were issued in March, May, June, and April 2019, and Ethereum issued a total of additional issues from April to December 2019. About USDT 28 times. The main reason why the circulation of Ethereum can exceed that of Omni is mainly because the infrastructure of Ethereum is perfect, and the issuance of stable coins is simple and fast. In addition, Ethereum has received a lot of hardware and software wallet support, and can directly store ERC20 standard stable coins In addition, the network agglomeration effect has also made the stablecoin project on Ethereum more active than other blockchains.
The "USDT Hearing" was held, which aroused worldwide attention. On April 24, 2019, the New York Prosecutors (NYAG) issued a 23-page lawsuit alleging that Bitfinex, Tether and the parent company iFinex had four major violations including unlicensed operation, and suspected of misappropriation of $ 850 million in security deposits. On July 30, the "USDT Hearing" was held to discuss whether Bitfinex, Tether and the parent company iFinex illegally issued USDT. The USDT had a fierce debate with the New York prosecutors.
2.2 USDC: Stablecoin market ranks second in terms of market value, with transactions expanding to 85 countries worldwide   The full name of USDC is USD Coin, which is a stable coin based on the Ethereum platform and ERC20 issued by the Centre Alliance in 2018, and plans to anchor the US dollar 1: 1. This is the first stable coin open source project in Centre. The Centre Alliance consists of financial institutions that meet regulatory, compliance, reserve, audit and other requirements. Members of the Alliance have the right to issue USDC and the obligation to redeem USDC at the request of users. Currently, the Alliance members include Circle and Coinbase. USDC's reserve balance is audited monthly by Grant Thornton LLP.

As of December 31, 2019, the total market value of USDC was approximately USD 521 million, ranking second in the stablecoin market, ranking 27 in the cryptocurrency market, and trading volume of approximately USD 357 million in 24 hours. The market value of USDC in 2019 increased by 102.25%. The supply of USDC and the average daily issuance are very considerable, and it is the number one stablecoin in addition to USDT.

In May 2019, the cryptocurrency exchange Coinbase announced that it will expand USD Coin (USDC) transactions anchored with the US dollar to 85 countries around the world. Coinbase said that in addition to providing stable value storage, USDC can now complete "near real-time" transactions almost globally. More importantly, USDC is different from other cryptocurrencies. Not only is each stablecoin supported by US $ 1, it also conducts monthly audits to disclose 100% transparency of US dollar reserves. On October 2, Coinbase announced a new plan called USDC Reward, which allows US customers to earn a combined monthly income of 1.2% by simply storing USDC in their account. Coinbase is committed to improving USDC's dominance through the above measures.
2.3 PAX: the first compliant stablecoin, ranking third in the market value of stablecoin   The full name of PAX is Paxos Standard Token. It is a fiat-type stablecoin that plans to 1: 1 anchor the US dollar. PAX is one of the earliest stablecoins in the market that complies with regulatory requirements and is regulated by the New York Department of Financial Services (NYDFS). PAX reserves are deposited in banks protected by FDIC insurance and audited monthly by audit company Withum. In addition, Deloitte and Grant Thornton will conduct an annual audit of Paxos' internal management and financial operations.

As of December 31, 2019, the total market value of PAX was about 226 million US dollars, ranking third in the stablecoin market, and 36 in the cryptocurrency market. The 24-hour trading volume was about 253 million US dollars, and the market value in 2019 rose 58.04%. From September 2018 to December 2019, the number of PAX issuances was frequent, and the number of additional issuances varied. The maximum daily issuance was 21.66 million on June 28, ranking second in addition to USDT.

As the world's first stablecoin approved and regulated by the government, PAX has received much attention since its launch. As of December 31, 2019, PAX has been accepted and recognized by more than 30 international mainstream exchanges and well-known bitcoin-related institutions from around the world. It has been launched on 99 trading platforms and OTC platforms, indicating that the exchanges and markets are compliant with PAX. It is one of the most widely accepted and widely used digital currency stablecoins in the world.
2.4 TUSD: the first stablecoin issued by the government guaranteeing compliance and transparency leading the industry   TUSD is a fiat-collateralized stablecoin that plans to 1: 1 anchor the U.S. dollar, and is issued by Trust Token on the Ethereum platform in 2018. TUSD is regulated by U.S. laws and is the world's first stablecoin issued by a government guarantee. It is also the world's first stablecoin to receive an MSB (Money Services Business) license issued by a US regulator.

TUSD's practical exploration in compliance and transparency is ahead of other stablecoins. As a stable currency that adheres to core criteria such as proof of funds, redemption capabilities, legal compliance, TUSD's compliance transparency is specifically reflected in its issuing team's inability to obtain any escrow funds and participate in the allocation of escrow funds. The funds are transparent and regularly open Independent third party audit report and obtained US MBS regulatory approval. The redemption of TUSD will not be affected by any single institution, because it manages funds through multiple different regulated third-party financial institutions, which is also one of the biggest differences between TUSD and other stable currencies that anchor fiat currencies. In addition, the well-known American accounting firm Armanino, as an independent third-party institution, created and launched the TUSD real-time fund verification platform, which increased the transparency of TUSD from the original monthly audit report, and even increased the data to be updated every minute. At the same time, TUSD implements strict KYC / AML verification, maintains compliance by adding KYL (Customer Background Check) and AML (Anti-Money Laundering Review), and even reviews user single transactions to reduce risk.

As of December 31, 2019, the total market value of TUSD was US $ 155 million, ranking fourth in the stablecoin market, the market value of the cryptocurrency market was 46, and the 24-hour trading volume was approximately US $ 188 million. The TUSD market value in 2019 fell by 25.73%. The TUSD issuance period began in June 2018 and ended on December 31, 2019. The latest issuance was on January 1, 2019, and the number of additional issuances was approximately 2.1 million. Compared to the other four stablecoins, the number of additional TUSD issuances is small.

In early 2019, TUSD announced the launch of a major technological innovation, AutoSweep, which enables its cooperative users such as exchanges and custodians to easily manage millions of user addresses, and its functions are built into TUSD's newly deployed smart contracts. Through AutoSweep, cooperating users can provide each customer with a unique TUSD deposit address, which can be automatically attributed to the main wallet of institutions such as exchanges and does not charge any gas fees. In addition, TUSD has also created a unique and easy-to-remember redemption address function, allowing users to implement convenient and direct transaction operations to their bank accounts.
2.5 DAI: Crypto asset mortgage stable coin, multi-collateral DAI goes online   DAI is a crypto asset-collateralized stablecoin that was issued on the Ethereum platform by the MakerDAO project team in 2017. There are two main tokens in the Maker system. The first is the stable coin DAI, and the second is the management token MKR. Users with MKR form a decentralized management community, and they decide which kind of value is valuable. Digital assets can be used as mortgage assets and liquidation ratios, so MKR can also be understood as a community governance token. The user obtains DAI at a certain rate by collateralizing the encrypted assets. The collateralized encrypted assets are stored in the CDP (Collateralized Debt Positions) smart contract. At the same time, the user needs to pay an interest called a "stabilization fee". This interest Pay in MKR. In order to ensure the stability of the lending system, the mortgage loans in the system are over-collateralized, and there are settling measures. In other words, when the value of the collateral is lower than the liquidation value, the CDP will be liquidated, and the collateral will be forced to liquidate and used to repurchase DAI to ensure DAI's solvency. DAI is not a hard-anchored currency, but it will guarantee its value to be 1: 1 stable against the US dollar through a series of financial incentives.

On November 18, 2019, the MakerDAO team announced the official launch of multi-collateral DAI. The original DAI generated from single collateral will be renamed SAI, the multi-collateral DAI will officially adopt the DAI name, and the single-collateral SAI will run for several months in parallel, and will be closed after the transition period ends, holding SAI during this period Of users can choose to convert SAI to DAI. After the transition period ends, the SAI system will start global settlement. At that time, the price of SAI will no longer be linked to the US dollar, but will fluctuate with the price of Ethereum. The expansibility and openness of the multi-collateral DAI protocol means that under the governance of MKR holders, with appropriate risk parameters, almost all crypto assets can be used as collateral in the Maker system. In addition, the multi-collateralized DAI introduces the deposit interest rate function. Any holder can lock the DAI in the DSR contract to obtain the current interest, and deposit and withdrawal, and the user can directly use DAI to pay the stabilization fee.

Due to the launch of the multi-collateral DAI, the market value of the single-collateral SAI has been falling. As of December 31, 2019, the total market value of the SAI was US $ 40.795 million and the 24-hour trading volume was approximately US $ 616.67 million. The total market value of the multi-mortgage DAI has not yet been announced, and the 24-hour trading volume is about US $ 4.643 million. DAI began to issue additional shares in June 2018. The amount of additional issuances is less than the other four. Since the multi-mortgage DAI went online on December 18, the number of additional issuances has surged, but most of them were converted from SAIs.

3 Government attitude: Be cautious and be alert to risks
Since the release of the "Libra" white paper by Facebook on June 18, 2019, the project has gone through stages such as initial heated discussions, multiple rounds of hearings, and withdrawal of some participants, triggering risks from governments and international organizations to stable coins such as Libra. Wide attention. Since the second half of 2019, major international organizations, governments, and central banks have issued relevant reports or speeches on stablecoins.Among them, the G7, the European Union, and the US Federal Reserve have clearly stated that they will not do so until laws, regulations, and risks are fully identified and resolved. Allow global stablecoins to operate.
The international community and most countries are cautious about stablecoins and believe that there are a series of risks and problems with stablecoins, and further supervision is needed. The G20 conference statement affirmed the potential benefits of stablecoins in financial innovation, and pointed out that joint regulation of stablecoins will be added to address risks. The Anti-Money Laundering Financial Action Task Force (FATF) said that emerging assets such as stablecoins have risks such as money laundering, and the development of standards for stablecoins and other virtual currencies will be on the agenda. The Central Bank of the Netherlands (NDC) issued a statement saying that the emergence of the global stablecoin requires active measures to timely control the risks associated with the stablecoin plan. The European Central Bank released the "Stablecoin Report" and is cautious about stablecoins. In the future, it will further explore the policy and regulatory framework of stablecoins, including the modification of smart contracts, the disclosure of information and the upgrade of infrastructure. In order to meet the challenges brought by stablecoins, some countries have taken corresponding measures. Chinese central bank official Chen Yulu said that the global stablecoin will impact a country's currency sovereignty, and the creation of the central bank's digital currency (DCEP) is to meet the challenges brought by the global stablecoin. The United States Financial Crimes Enforcement Network (FinCEN) has included stablecoins under supervision and determined that all stablecoins are within the jurisdiction of its "currency transfer service", and the issuers of stablecoins will be classified as currency transfer service agencies. The stablecoin administrator must register a currency service business (MSB) with FinCEN.
4 Forecast and Outlook
The market size of stablecoins will continue to expand in 2020. With the rapid development of digital currencies, the main value of stablecoins has changed from the initial "investment channels" and "value preservation media" for individual investors to enter the virtual currency market, to being used as efficient payment settlement tools, and now to new types of blockchain finance and The role and value of the "currency" within the business ecosystem is constantly changing. In 2019, the three major cryptocurrency exchanges and corporate giants entered the stablecoin market, bringing new opportunities. It is believed that as more and more institutions and funds enter the cryptocurrency field, the market demand for stablecoins will continue to expand. . In the long run, more application scenarios are needed to win. With the further development of infrastructure such as public chains, and the landing of various applications and financial services on the chain, the new demand for stablecoins may come from some areas that require online payment. Whether it is the consumption behavior of goods and services in DAPP, or various types of on-chain financial behavior such as "savings", "borrowing", and "funds" based on digital assets, they must be undertaken by stablecoins with sufficient value recognition and stable purchasing power. Value measures and the function of the transaction medium. Before the public chain's own basic tokens have not completed sufficient value growth and stability, a safe and reliable stable coin is essential for the development of the public chain ecology. Therefore, in the long run, competition between various types of stablecoins may begin in terms of application scenarios. Compliance and supervision have become the focus of stablecoin's future development. After USDT, all types of fiat currency collateralized stablecoins are actively developing in the direction of regulatory compliance and audit transparency. In particular, in April 2019, Bitfinex allegedly misappropriated USDT's USD reserve funds to fill the short-term fermentation, which caused a huge blow to investors' confidence in stablecoins. Major international organizations, governments, and central banks have published reports or speeches on stablecoins, expressing their intention to further accelerate research and strengthen supervision of stablecoins. Achieving security and credibility under regulatory compliance has become the primary issue that needs to be addressed in the development of stablecoins.

The central bank ’s digital currency is dancing, and the competitive landscape is at an inflection point. Central banks are increasingly exploring the possibility of creating their own digital currencies. In December 2019, the Brookings Institution of the United States recently released a research report that as of December, many countries have made substantial progress in the development of "central bank digital currencies" or intend to issue "central bank digital currencies", including France, Sweden, Saudi Arabia, Thailand, Turkey, Bahamas, Barbados, Uruguay, etc. On December 12th, European Central Bank President Lagarde said at a press conference that the Central Bank's Digital Currency Special Committee has been established and will accelerate the efforts to study the phenomenon of digital currencies. It is expected to reach a conclusion in mid-2020. Once governments begin to accept or issue central bank digital currencies, the current stable currency situation will have to be reshuffled. From an industry perspective, stablecoins have clearly become a bridge between the digital world and the real world. With the entry of central bank digital currencies, the industry will also usher in a shuffle.

The concept of A-share digital currency will be the big blast of 2020. From an investment perspective, digital currency will be an important theme in 2020. At present, market recognition is that after the central bank formulated the DCEP agreement, the commercial banks' operation of digital currencies requires technical support and demand transformation, so they value investment opportunities in the financial IT field. However, we believe that the restructuring of the digital economy by the central bank's digital currency may be far more than a system transformation. With the advent of 5G, more and more social activities will be transferred to the digital world, and DCEP will have greater imagination. Pay attention to related subjects such as Sifang Jingchuang, Easy to see, Donggang, Changliang Technology, Feitian Integrity, Gao Weida, and Jincai Interconnect.

risk warning
The development of blockchain technology is not up to expectations: The stablecoins analyzed in this report are mainly encrypted digital assets based on blockchain. In the long run, an important factor in the development prospects of digital assets is the development progress of the blockchain technology itself. The current blockchain technology has the “impossible triangle” problem that is difficult to balance the three factors of “decentralization”, “performance” and “security”. The implementation of the blockchain business model is not up to expectations: The long-term development of blockchain-based digital assets is also related to the implementation of the blockchain business model. The current blockchain business model has at least the following problems: the need for other technical cooperation (difficult to resolve the consistency of information on the off-chain chain), the bottleneck of the blockchain technology, and the difficulty of balancing the price stability of the blockchain's ecological users and Investment users' expectations for the appreciation of tokens, etc. Digital asset prices fluctuate too much: In a considerable number of digital asset trading platforms, digital assets are traded 7 * 24 hours without limit limits, there may be market manipulation and fraud, and inadequate supervision, and investor protection may be weak. . The price of stablecoins may be difficult to achieve transparency and stability.

The implementation of regulatory and compliance policies has fallen short of expectations: Although blockchain technology has no geographical attributes, governments of various countries may prohibit the development of stablecoins.

This article is an excerpt from the report "Guo Sheng Blockchain | Legal Digital Currency Dancing, Industry Change Is Coming-Stable Coin 2020 Outlook" released by Guosheng Securities Research Institute on January 26, 2020. For details, please refer to the relevant report. .