Fiat-backed tokens are a type of stablecoin whose value is pegged to a specific fiat currency, such as the US dollar, through reserves held by an issuing entity. These tokens aim to provide price stability in the volatile digital asset market. They offer a digital representation of traditional money on a blockchain.
Context
Fiat-backed tokens are a central point of regulatory focus due to concerns about reserve transparency and potential systemic risks. News reports often detail new regulations or audits aimed at ensuring these tokens are adequately collateralized and managed responsibly. Their increasing use in decentralized finance and international commerce highlights the need for clear oversight to maintain financial stability.
The new ASIC class order strategically streamlines stablecoin distribution by shifting the primary licensing burden to the AFS-authorized issuer, reducing intermediary compliance friction.
Stablecoins are leveraged as an instantaneous, borderless settlement layer to de-risk FX exposure and bypass legacy banking rails in high-volatility markets.
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