Examining the Global Regulatory Landscape for Algorithmic Stablecoins

Blockchain Today
6 min readFeb 14, 2024

As blockchain disruption reaches mainstream finance, stable cryptocurrencies emerge as key bridges between existing monies and digital asset innovation. Their steady values protect against volatility that hinders cryptos like Bitcoin from becoming cash alternatives.

Two approaches create stability — collateral models like USDC backed by external dollar reserves, and algorithmic models relying on coded monetary policies. Recent crashes of algorithms like TerraUSD ignited global debates around their risks. How countries regulate each type splits along fascinating philosophical lines centered on software control over money creation.

We analyze nuanced stances worldwide around algorithmic stablecoins and examine real models that countries permitted or prohibited and why. The insights reveal ideological fault lines likely to shape blockchain regulation for years.

The Promise and Perils of Algorithmic Stablecoins

What are algorithmic stablecoins?

Unlike collateralized stablecoins backed by fiat reserves off-chain, algorithmic stablecoins use coded financial engineering policies that expand and contract supply responding to demand for maintaining $1 pegs.

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