Designing Trust in Digital Money

Abstract

Stablecoins have emerged as a transformative yet controversial development in digital finance, promising stability while posing novel regulatory and systemic risks. Their growing role in payments, decentralized finance, and remittances raises questions about monetary sovereignty, consumer protection, and financial integrity. This chapter examines the governance of stablecoins through comparative and interdisciplinary perspectives, focusing on the evolving relationship between self-regulation, soft law, and hard law. Special attention is given to the Commonwealth Model Law on Stablecoins (2025), which provides a harmonised legislative framework designed to balance innovation with financial stability and inclusion. By comparing this model law with international approaches such as the EU's Markets in Crypto-Assets Regulation (MiCA) and voluntary standards from global standard-setting bodies, the chapter highlights how model laws can bridge the gap between flexibility and enforceability in the governance of digital money.