Name: Digital Money Solutions — Stablecoin & CBDC Compliance
Brand: Nth Exception

Question 1

What is a stablecoin and why does compliance matter?

Accepted Answer

A stablecoin is a digital token backed by reserves to maintain price stability. Compliance ensures AML/CFT controls, reserve transparency, and adherence to the FATF Travel Rule.

Question 2

What is a CBDC and how should banks prepare?

Accepted Answer

A CBDC (Central Bank Digital Currency) is issued by a central bank. Preparation requires upgrading data models, joining pilots, and implementing settlement, liquidity, and AML/CFT controls.

Question 3

What is the FATF Travel Rule?

Accepted Answer

The FATF Travel Rule requires originator and beneficiary information to accompany digital asset transfers, ensuring transparency and preventing illicit finance.

Question 4

How do stablecoins impact cross-border payments?

Accepted Answer

Stablecoins can reduce settlement costs and increase speed, but regulatory compliance and interoperability with banking infrastructure are essential.

Question 5

What risks are associated with CBDCs?

Accepted Answer

Risks include privacy concerns, cyber threats, liquidity impacts on commercial banks, and the need for strict AML/CFT safeguards.

Question 6

What is stablecoin reserve transparency?

Accepted Answer

It refers to disclosing and auditing the assets backing a stablecoin, ensuring it is fully collateralized and trusted by users and regulators.

Question 7

How does ISO 20022 relate to digital money?

Accepted Answer

ISO 20022 provides structured, machine-readable data that improves reconciliation and monitoring — making it critical for stablecoin and CBDC interoperability.

Question 8

What are AML/CFT requirements for stablecoins and CBDCs?

Accepted Answer

They include strong KYC, transaction monitoring, sanctions screening, suspicious activity reporting, and compliance with cross-border regulations.

Question 9

How does SWIFT support CBDC and stablecoin integration?

Accepted Answer

SWIFT is piloting interoperability projects to connect CBDCs and tokenized assets across its network using ISO 20022 messaging standards.

Question 10

What does “CBDC readiness” mean for financial institutions?

Accepted Answer

It means adapting systems for CBDC integration, testing in pilots, building compliance frameworks, and aligning liquidity and settlement processes.

Question 11

What is programmable money?

Accepted Answer

Programmable money allows conditions to be embedded into transactions, enabling use cases such as automated treasury management and supply chain finance.

Question 12

How do central banks regulate stablecoins?

Accepted Answer

Central banks require licensing, reserve audits, AML/CFT compliance, and sometimes restrict usage until clear regulatory frameworks are in place.

Question 13

What is Circle’s approach to stablecoin compliance?

Accepted Answer

Circle emphasizes reserve transparency, licensing, Travel Rule compliance, and interoperability standards to align USDC with global regulations.

Question 14

What are wholesale CBDCs?

Accepted Answer

Wholesale CBDCs are digital currencies restricted to financial institutions, designed to improve settlement efficiency in interbank and cross-border markets.

Question 15

What are retail CBDCs?

Accepted Answer

Retail CBDCs are digital currencies available to the public, designed as a digital complement to cash for everyday transactions.

Question 16

How does the UAE Central Bank approach digital money?

Accepted Answer

The UAE Central Bank is piloting the Digital Dirham with cross-border focus, strict AML/CFT controls, and international interoperability.

Question 17

What role does BIS play in CBDC development?

Accepted Answer

The BIS coordinates central bank research, publishing frameworks on interoperability, privacy, and risk management for CBDCs.

Question 18

How can banks mitigate digital money compliance risks?

Accepted Answer

Banks should strengthen KYC, deploy AI-driven transaction monitoring, join Travel Rule networks, and integrate ISO 20022 data standards.

Question 19

What is tokenized deposits vs stablecoins?

Accepted Answer

Tokenized deposits are digital representations of bank deposits, issued by regulated banks, while stablecoins are private tokens backed by reserves.

Question 20

Why should institutions act now on digital money compliance?

Accepted Answer

Early action reduces regulatory risk, ensures readiness for CBDC pilots, and positions institutions to capture first-mover advantage in digital finance.

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Navigating Stablecoin & CBDC Compliance