A stablecoin issuer wants to ensure that the supply of tokens always matches the fiat reserves. Which process should they implement?

Burn tokens only when the price rises above the peg

Mint tokens based on market demand and burn tokens when the price falls

Mint tokens only when fiat is deposited and burn tokens when fiat is withdrawn

Mint tokens at a fixed rate and rely on market forces to adjust supply

What is the primary defining characteristic of a stablecoin?

It is fully anonymous and untraceable.

It is mined using proof-of-work consensus.

It maintains a stable value relative to a reference asset or basket.

It is issued by a central bank.

A stablecoin issuer faces a sudden surge in redemption requests. Their reserves are held in short-term government bonds. The issuer needs to meet redemptions quickly without selling bonds at a loss. Which strategy is most appropriate?

Issue additional stablecoins to raise cash for redemptions

Maintain a portion of reserves in cash or cash equivalents to cover unexpected redemption spikes

Suspend redemptions temporarily until the bond market stabilizes

Sell bonds immediately regardless of market conditions

What is the primary role of reserves in the issuance of a fiat-collateralized stablecoin?

To generate yield through lending to other protocols

To fund marketing and operational expenses

To pay transaction fees on the blockchain

To provide collateral that backs the value of each issued token

A stablecoin project is considering switching from a fiat-collateralized model to an algorithmic model to reduce reliance on bank reserves. What is the most significant risk they should evaluate?

Algorithmic stablecoins are always illegal

Algorithmic stablecoins are less transparent

Algorithmic stablecoins are more susceptible to death spirals and de-pegging

Algorithmic stablecoins require more physical collateral

EC-CouncilBlockchain Fintech Certification

Domain 6Objective 3

Stablecoins and Their Use Cases in Finance BFC Practice Questions (Page 7)

Part of the Digital Currencies and Cryptocurrencies domain, which makes up ~15% of our current practice bank.

49questions here

10free pages

8concepts

Questions 31–35

31application · medium
A stablecoin issuer wants to ensure that the supply of tokens always matches the fiat reserves. Which process should they implement?
Select an answer first
32foundation · easy
What is the primary defining characteristic of a stablecoin?
Select an answer first
33expert · hard
A stablecoin issuer faces a sudden surge in redemption requests. Their reserves are held in short-term government bonds. The issuer needs to meet redemptions quickly without selling bonds at a loss. Which strategy is most appropriate?
Select an answer first
34foundation · easy
What is the primary role of reserves in the issuance of a fiat-collateralized stablecoin?
Select an answer first
35expert · hard
A stablecoin project is considering switching from a fiat-collateralized model to an algorithmic model to reduce reliance on bank reserves. What is the most significant risk they should evaluate?
Select an answer first

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