ABSTRACT
This chapter investigates three types of cryptocurrency systems: unstable coin systems on the public chain, stable coin systems on the private chain and state-backed cryptocurrency systems. It assesses the extent to which each of them can promote access to finance by focusing on four regulatory objectives: value stability, market integrity, consumer protection and fairness, and security against theft. These four objectives form the initial basis for analysing whether a cryptocurrency system can give users sufficient confidence for them to access this emerging financial market. Bitcoin is used as an example of an unstable coin system on the public chain to examine its ability to provide access to finance. The risks involved in this system are pointed out along with a discussion about whether stable coins, such as Diem, can mitigate them. State-backed digital currency (as a type of state-backed cryptocurrency) is then used to highlight further pros and cons of decentralised cryptocurrency systems such as Bitcoin and Diem, and to analyse whether it provides a better solution for users.
Keywords: cryptocurrency, Bitcoin, Diem, DCEP, digital currency, consumer protection
