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🪙 How a Stablecoin is Minted: A Step-by-Step Guide

Yogi Nelson

Welcome to the BlockchainAIForum where your technology questions are answered. Today we take explore the step-by-step process used to “mint” stablecoins. Minting is more than just pressing a button on a website—it involves a structured process combining real-world financial steps and blockchain technology. Stablecoins are blockchain-based tokens designed to maintain a steady value, typically pegged to a fiat currency like the US dollar. But what actually happens when someone “mints” a stablecoin? This article explains, in clear terms, how a fiat-backed stablecoin (like USDC or USDT) is minted, step by step.

📌 1️⃣ User Onboarding and Compliance

Step summary: The user proves their identity and gets authorized to use the stablecoin system.

  • What happens?
    A customer (say, Alice) wants to buy stablecoins. She registers with the issuing company (like Circle for USDC).
    She completes KYC (Know Your Customer) checks: uploading identification, proof of address, and sometimes even undergoing a video verification.
    Compliance teams review her information to prevent fraud, money laundering, or sanctions violations.
  • Tools used: Web forms and apps, compliance software, human compliance officers
  • Physical work: Reviewing documents, customer support for failed KYC

💰 2️⃣ Fiat Deposit

Step summary: The user sends actual money to the issuer.

  • What happens?
    Alice wires $10,000 from her bank account to the stablecoin issuer’s designated bank account. The issuer’s bank confirms receipt.
  • Tools used: SWIFT, ACH, SEPA, payment processors
  • Physical work: Bank staff may review or clear large transactions; finance teams reconcile wires

🔎 3️⃣ Treasury Verification and Approval

Step summary: The issuer confirms the deposit and authorizes minting.

  • What happens?
    The stablecoin company’s treasury team verifies the wire against Alice’s account. They check that the money actually settled (not just pending) and approve the minting amount.
  • Tools used: Banking portals, internal ledgers, compliance software
  • Physical work: Treasury analysts approve transactions; auditors may review records

🛠️ 4️⃣ Blockchain Transaction: Minting

Step summary: The issuer creates new tokens on-chain.

  • What happens?
    An authorized operator accesses the issuer’s blockchain wallet and uses a smart contract function called mint to create 10,000 new tokens. This transaction is submitted to the blockchain network.
  • Technical detail:
    The mint function increases the token supply by the specified amount. Validators confirm and record the transaction.
  • Tools used: Blockchain wallets (e.g., MetaMask, Gnosis Safe), command-line tools, smart contract interfaces
  • Physical/computer work: An employee signs the transaction using secure keys; blockchain nodes confirm it

🔗 5️⃣ Recording and Auditing

Step summary: The issuer updates internal records and ensures accountability.

  • What happens?
    The treasury updates its ledger: Alice’s $10,000 in the bank is matched by 10,000 newly minted tokens. Issuers often maintain 1:1 backing by keeping fiat reserves in segregated accounts.
  • Tools used: Accounting software, audit dashboards, blockchain explorers
  • Physical work: Accountants reconcile records; auditors verify the match between tokens and reserves

📲 6️⃣ Delivery to Customer

Step summary: Alice receives the stablecoins in her wallet.

  • What happens?
    The issuer sends the newly minted 10,000 tokens to Alice’s blockchain address. She sees them in her wallet and can now trade, lend, or hold them.
  • Tools used: Blockchain wallets, blockchain explorers, issuer’s platform for delivery
  • Physical/computer work: Staff initiates the transfer; Alice confirms receipt in her wallet

✅ Conclusion

Minting a stablecoin is not just a “crypto” step but a process that bridges real-world banking and blockchain technology. It involves:

  • Customer onboarding and compliance
  • Receiving and verifying fiat deposits
  • Authorized blockchain minting
  • Careful treasury management and audits
  • Delivering tokens to users

This process ensures that each stablecoin is genuinely backed by real assets, maintaining trust in the system.

📜 Final Note

Stablecoin issuers often publish attestation reports by independent auditors, proving that the total tokens in circulation match the fiat reserves held in bank accounts. This transparency is critical for user confidence in the stablecoin’s peg.

Time to go but first a proverb from Fiji, where they say: “children are like empty pots–they need careful fillling.

Until Next Time,

Yogi Nelson

AI Agents, AI Tools, Artificial Intelligence, Banking, Blockchains, cryptography, Decentralized, Digital Currency, international aid, International Finance, Productivity, Science, Uncategorized, Yogi Nelson

The Advantages of Stablecoins for Sending Remittances and International Payments

Yogi Nelson

🌍💸

By Yogi Nelson

Welcome to the BlockchainAIForum where your technology questions are answered. Today we answer the following question: What are the advantages of stablecoins to transmit remittances and international payments?

Sending money across borders has long been expensive, slow, and sometimes unreliable. Millions of families around the world rely on remittances—money sent home by people working abroad. Traditional methods often take days to arrive and cost a big chunk of the amount sent in fees.

Enter stablecoins: a type of cryptocurrency designed to hold a steady value, usually pegged to a traditional currency like the U.S. dollar. While “crypto” might sound complicated or risky, stablecoins have clear advantages for cross-border payments—especially for everyday people who just want to get money to loved ones quickly and cheaply. Below, let’s explore what makes stablecoins such a game-changer for international payments.

🕰️ 1️⃣ Faster Transfers

Traditional money transfers often rely on banks and money transfer operators. These institutions use old payment networks that involve multiple middlemen. It can take 2–5 business days for the money to arrive. I can speak from personal experience–too slow in today’s world.

✅ With stablecoins:

  • Transfers are nearly instant or settle in minutes.
  • Blockchain networks operate 24/7, including weekends and holidays.

Example: Sending USDC (a popular U.S. dollar-pegged stablecoin) from the U.S. to someone in Panama can take under 10 minutes, compared to days via bank wires.

💰 2️⃣ Lower Fees

Sending money internationally is notoriously expensive. According to the World Bank, the average remittance fee is around 6% globally—and even higher in some regions. Banco Popular charged me $100 to send $5,000 to Panama. Way too expensive!

✅ Stablecoins reduce fees because:

  • No need for multiple banks to process the payment.
  • No foreign exchange markup if both sender and receiver use the same stablecoin (e.g., USDC, USDT).

Example:

  • $100 sent via Western Union might cost $6–10 in fees.
  • $100 sent as a stablecoin can cost under $1 in network fees, depending on the blockchain used.

🌐 3️⃣ Global Accessibility

Many people in developing countries do not have bank accounts. But they often have smartphones. Stablecoins can be sent, received, and stored on mobile wallets, without the need for a traditional bank.

✅ Key benefits:

  • Financial inclusion for the unbanked or underbanked.
  • Access to USD-equivalent value without needing a dollar bank account.

Example: A worker in the U.S. can send USDC to a family member in El Salvador who holds it in a smartphone wallet, without needing local bank infrastructure.

💵 4️⃣ Protection Against Local Currency Volatility

In some countries, local currencies lose value quickly due to inflation. Receiving money in local currency may mean losing purchasing power almost immediately.

✅ Stablecoins help by:

  • Being pegged to stable currencies like USD.
  • Preserving value across borders and over time.

Example: A family in Argentina might prefer to receive USDC instead of pesos, protecting their remittance from inflation.

🔐 5️⃣ Transparency and Security

Stablecoin transactions are recorded on blockchains, which are public, auditable ledgers. This adds an extra layer of security and transparency.

✅ Advantages:

  • Sender and receiver can track the transfer in real-time.
  • Less risk of funds being lost in transit.
  • Resistant to censorship and freezes compared to some traditional systems.

⚡️ How Does It Work in Practice?

Here’s a simplified step-by-step:

  1. Sender buys stablecoins on an exchange or app.
  2. Sender transfers stablecoins to the recipient’s wallet address.
  3. Recipient receives them instantly or in minutes.
  4. Recipient can hold them, spend them where accepted, or convert to local currency.

This simple flow cuts out middlemen and delays.

🌟 Conclusion: A Better Way to Send Money

Stablecoins are not just a trend. They offer real, practical benefits for millions who rely on international payments:

  • ✅ Faster delivery times.
  • ✅ Lower costs.
  • ✅ Greater accessibility.
  • ✅ Protection from inflation.
  • ✅ Transparent and secure transactions.

Of course, challenges remain, like educating users, ensuring good regulation, and making stablecoins easy to cash out locally. But as adoption grows, these hurdles are being addressed.

For many families, stablecoins are already changing the way money crosses borders, making remittances fairer and more efficient.

💬 My closing thought comes from Ethiopia where they say: “a fool is thirsty in the midst of water.” If you have thoughts or questions about stablecoins and remittances, drop them in the comments below!

Until Next time,

Yogi Nelson

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Crypto’s Legal Makeover: GENIUS and the Rise of Regulated Stablecoins

Yogi Nelson

What Is the GENIUS Act?

Blockchain & AI Forum — June 2025
By Yogi Nelson

Welcome to the Blockchain & AI Forum, where your questions are answered!
As a bonus, every post includes a proverb from around the world.

Today’s question comes from Latasha, who asks: What is the GENIUS Act?

🔍 Overview

The GENIUS Act has been approved by the U.S. Senate! It was introduced by Senator Bill Hagerty of Tennessee, your home state. As expected, GENIUS is an acronym:
“Guiding and Establishing National Innovation for U.S. Stablecoins, 2025.”

Let’s walk through what this bill says—section by section—and what it could mean for stablecoin issuers, regulators, and the future of U.S. digital finance.

📘 Key Definitions

GENIUS defines 23 terms, but none more important than this one:

Payment Stablecoin: A digital asset designed for payments or settlement. The issuer must maintain a fixed redemption value (e.g., 1:1 with the U.S. dollar) and is required to redeem, repurchase, or convert the token on demand. It is not a national currency or a security.

🏛️ Who Can Issue Stablecoins?

If GENIUS becomes law, (waiting for the House of Representatives and the President to act) only permitted stablecoin issuers may issue payment stablecoins. That means:

No freelancers. No startups cutting corners.
If you’re unauthorized—you’re out. Or worse, facing federal prison time. 🫢

🧾 Requirements for Issuing Stablecoins

Issuers must:

  1. Maintain 1:1 Liquid Reserves
    Reserves must include:
    • U.S. dollars
    • Bank demand deposits
    • Treasury bills, notes, or bonds (≤ 93 days)
    • Short-term repurchase agreements (≤ 7 days)
    • Money market funds
    • Federal Reserve deposits
  2. Ensure Transparency
    • Disclose redemption policies
    • Publish monthly reserve composition
    • Establish clear redemption procedures
  3. Certify Compliance Monthly
    • Signed certifications by both CEO and CFO

What Stablecoin Issuers Can Do

Issuers are restricted to these activities:

  • Issue and redeem stablecoins
  • Manage reserves
  • Provide custodial or safekeeping services
  • Engage in directly related activities

No off-brand ventures allowed.

🏢 Who Will Regulate?

Good news: no new federal agency will be created. Oversight will remain with existing regulators:

  • National Banks: Supervised by the OCC (Office of the Comptroller of the Currency)
  • FDIC-Insured Banks: Supervised by the FDIC
  • State-Chartered Banks: Must follow GENISIS via state regulators
  • Qualified Nonbanks: Regulated by the OCC

This streamlined approach avoids regulatory overlap and confusion.

📄 Application & Approval Process

Once an application is deemed complete, regulators have 120 days to approve or deny.

The Catch:
The 120-day clock doesn’t start until the regulator says the application is complete. A hostile regulator could delay indefinitely by asking for more documents.

If the application is rejected, the regulator must:

“Explain all findings related to material shortcomings and offer actionable recommendations for improvement.”

My Take:
This is unusual—and potentially risky. It effectively requires regulators to teach applicants how to qualify. That raises a key question:

If an applicant can’t complete a solid application, can they really run a stablecoin program? 🤔
And if the program later fails, will they blame the regulator for “bad tutoring”?

⚖️ Rulemaking Timeline

GENIUS includes a standard Rulemaking section.

Congress gives agencies 180 days from enactment to issue final regulations.

🏁 In other words: regulators, start your engines.

🌍 Proverb of the Day

Before I head out, here’s your bonus proverb:

🐻 “A hungry bear does not dance.”
– Turkish Proverb

Until next time,
– Yogi Nelson
Blockchain & AI Forum

Artificial Intelligence, Blockchains, cryptography, Digital Currency, international aid, International Finance, Uncategorized, Yogi Nelson

Understanding Blockchain Adoption in Uzbekistan

Yogi Nelson

Welcome to the Blockchain & AI Forum, where your technology questions are answered!  Today’s question: are blockchain and crypto currency adoption all the rage in Uzbekistan?

Seventeen years.  Yes, only 17 years.  In just 17 years, blockchain based projects, including bitcoin, starting from nothing, and all the while battling powerful incumbents, have spread far, wide, and fast to reach places, and spaces, that are distant and unfamiliar to most Westerns.  Today, I’ll highlight just one example of this phenomenon, the nation of Uzbekistan.  Let’s start with the obvious—where is Uzbekistan?

Uzbekistan is located in Central Asia.  Along with Kazakhstan, Kyrgyzstan, Tajikistan, and Turkmenistan, they were all former USSR republics.  Uzbekistan was part of the ancient silk road–a trade networks that connected China with Western Europe.  Although the silk road occurred more than half a millennia ago, Uzbekistan remains connected to the broader world, this time via blockchain and crypto-currency.  Let’s jump five centuries to the 21st.

Setting the Regulatory Stage: The National Agency of Perspective Projects, (NAPP) is the government body that regulates and licenses crypto in Uzbekistan.  In 2022, Uzbek President, Shavkaat Mirziyoyev, ordered NAPP to develop crypto regulations.  NAPP listened and took action.  By early 2023, crypto regulations were in place; by year’s end the first crypto license was issued!  Impressive.  Hold on, the news gets better.  Earlier this year, NAPP authorized Biance, the world’s largest crypto currency exchange, to offer services in Uzbekistan.  Customers are now able to deposit and withdraw funds in the national currency, the Soum, and conduct a wide range of transactions.  More on that in a moment.

What Happened After Crypto Regulations Were Adopted: Since adoption of clear and reasonable crypto regulations, development and usage of crypto in Uzbekistan has skyrocketed.  According to Coin Geek, a journal dedicated to the crypto world, Uzbekistan lacked behind its four Central Asian neighbors prior to 2022.  Not anymore.  Now it’s a leader.  As of this date, there are 15 licensed firms in Uzbekistan and total transactions surpassed $1B in 2024.  Awesome. Moreover, over 500,000 Uzbeks have digital assets—about 2% of the population.  The Uzbek government collected over $3M in fees and revenues in 2024.  This year the government announced an increase in crypto related fees.  What a surprise!  Lol.

Why Crypto Surged—3 Reasons:  Did a crypto friendly government policy trigger the crypto tsunami?  In part, yes.  When Uzbekistan created clear and stable regulations there was a favorable market reaction.  However, government regulations did not create demand; a market for these assets and products existed a-priori.  Crypto in Uzbekistan, and in every nation, is a counter narrative to the existing status quo and a solution to market demand. I’ll give you three specific reasons for the flood of crypto in Uzbekistan, starting with seamless cross-border transactions.

Uzbekistan has a long history of cross-border finance transactions, going all the way back to the silk road, as previously noted.  United Nations data reveals that in 2024, $14B worth of remittances occurred in Uzbekistan.  Stable-coins facilitate fast, easy, and affordable cross border transactions, hence the demand for crypto. 

Reason two is inflation.  Inflation in Uzbekistan ran at 10% in 2024.  Inflation is effectively a “hidden tax” because it erodes purchasing power of middle/lower-income families.  Almost all stable coins are denominated in U.S. dollars. Therefore, although the has been inflation in the US, it is nowhere near 10%, hence that makes dollar based stable coins a hedge against currency inflation. 

Third reason is speculation, plain and simple.  An honest analysis must acknowledge reality—many crypto projects amount to gambling and speculation.  Not a judgement; just an honest assessment.  Apparently folks in Uzbekistan like risk and freedom to choose.   

Time to end with a proverb from Uzbekistan, where they say: “it is not the eyes that are blind, but the heart”.

Until next time,

Yogi Nelson

Artificial Intelligence, Banking, Blockchains, cryptography, International Finance, Uncategorized

GENISUS Act: Implications for Stablecoin Issuers

Yogi Nelson

Namaste Yogis.   Welcome to the Blockchain & AI Forum, where your questions are answered!   As a bonus, a proverb is also included.  Today’s question comes from Latasha and she asks what is the GENISUS Act?

The GENISUS Act is a proposed federal law, introduced by Senator Hagerty of Tennessee–your home state.  To no surprise, GENISUS is an acronym: “Guiding and Establishing National Innovation for U.S. Stablecoins, 2025.” (Feds have the best acronyms!  Lol.)  Let’s review GENISUS Act section-by-section, beginning with definitions.

GENISUS defines 23 terms but none more important than Payment Stablecoin. According to GENISUS, a payment stablecoins is a digital asset that is designed to be used as a method of payment/settlement, and which the issuer is obligated to convert, redeem, or repurchased for a fixed amount of monetary value and represents it will maintain or creates the reasonable expectation that it will maintain, a stable value relative to the value of a fixed amount of monetary value, and is not a national currency or a security issued by an investment company.” We now move on to Sections 3 – 7.

Permitted Stablecoin Issuers:  If GENISUS becomes law only a permitted stablecoin issuer can issue stablecoins.  No free lancers permitted!  Don’t even consider it unless you enjoy living in a 6 x 9-foot prison cell with a dude name Buba!  Lol.

Requirements for Issuing Payment Stablecoins. There are a litany of requirements to issue a payment stablecoin.  Below are a few highlights of what issuers must do:

  1. Maintain reserves backing the issuer’s payment stablecoins outstanding on an at least 1 to 1 basis comprising of: U.S. Dollars, demand deposits held in U.S. banks, treasury bills, notes, and bonds of 93 days or less, repurchase agreements of seven days or less, money market funds, Central Bank reserve deposits.  In other words, liquid reserves that are 1-to-1. 
  2. Issuers must also publicly disclose their redemption policy, establish procedures for redemption, and publish monthly composition of the issuer’s reserve. Disclosure!
  3. Monthly compliance certificates from the issuers, CEO and CFO.

Limitations of Stablecoin Activities.  Stablecoin issuers are limited to the following activities:

  • Issue payment stablecoins
  • Redeem payment stablecoins
  • Manage related reserves
  • Provide custodial or safekeeping services for payment stablecoins
  • Other directly related work.

Stablecoin Regulators.  GENISUS does not establish a new federal stablecoin regulator.  Relief! Consequently, if a nationally chartered bank, e.g. Bank of America, issues a stablecoin the same federal banking regulator, Office of the Comptroller of the Currency, (OCC) that supervised Bank of America for safety and soundness, will be tasked with regulating the bank’s stablecoin operations.  Simple.  The same applies if the bank has a FDIC banking charter.  State chartered banks can issue stablecoins, provided their corresponding state banking regulators follows the GENISUS Act. Standard practice in banking.  What if a federal qualified nonbank wants to issue a stablecoin you ask?  OCC will be the regulator of those nonbank stablecoin issuers.  Let’s move on.

Application and Approvals.  From the date the stablecoin regulator deems the application complete, the applicant must be approved or denied within 120 days.  The catch is from the date the application is deemed complete.  A malicious regulator can string an applicant along with a constant request for additional information. 

If the regulator deems the application unsafe it can reject the application but it must explain with specificity, including all findings made by the regulator with respect to all identified material shortcomings in the application, including actionable recommendations on how the applicant could address the identified material shortcomings.  I find this last section unusual and troublesome.  Essentially GENISUS requires the regulator to explain to the applicant how to do their “homework”.  This is problematic.  Afterall, if an applicant is incapable of preparing a coherent application, doesn’t it portent an institution incapable of running the program effectively?  I think so.  Moreover, if the stablecoin issuer fails, will it blame the banking regulator for its failure given the issuer could reasonably claim it followed the regulator’s instruction? 

Rulemaking.  Did you know that when Congress passed a law it writes into the law a section titled rulemaking?  The purpose of this section is to authorized and require the executive branch to write the regulations necessary to implement the letter and spirit of the law.  In the case of GENISUS, Congress directed the various stablecoin regulators to issue the regulations within 180 days from the day GENISUS becomes law.  Regulators, you better step on the gas!

Time for me to make a genesis appearance at my next engagement but before I go, I leave you with this proverb from Turkey: “a hungry bear does not dance”.

Until next time,

Yogi Nelson