Stablecoins in Commercial Transactions: Ucc Issues With Formation and Payments on Blockchain, Regulatory Framework 2021 | Strafford | 29 July 2021 | Webinar

Description

Cryptocurrencies like bitcoin offer an accessible and borderless way to make payments, but price volatility and unpredictable transaction costs render them impractical for day-to-day use. Stablecoins are digital assets pegged to the value of another asset, often the U.S. dollar, thus increasing their acceptance as a medium of exchange in commercial transactions. Still, stablecoins present legal and regulatory issues.

Stablecoins differ from traditional financial infrastructures where transactions run through a licensed intermediary. They straddle the divide between currencies on the one hand and investment securities and commodities on the other. Counsel should understand the regulatory framework around stablecoins, including how they might be categorized by securities regulators and the current rules and guidance regarding custody and engagement by banks in blockchain networks.

Counsel must fully grasp fundamental concepts regarding settlement finality, rules for adverse claims, discharge of the underlying obligation, and the concept of a security entitlement. UCC Article 8 (securities) and UCC Articles 3, 4, and 4A (payment, adverse claims) offer a framework for understanding the rights and obligations of the parties to a transaction involving stablecoin.

Benefits
The panel will review these and other key issues:
• How does a stablecoin vary from other cryptocurrencies, and how does it retain a stable value?
• What are some issues to consider when making payments on the blockchain?
• How can a bank take possession of custody as security for a loan?
• When will a stablecoin be regarded by regulators as a security? A commodity?