FSB – Financial Stability Board – proposes 10 high-level recommendations on stablecoins

() So-cal­led “sta­ble­co­ins”, like other cryp­to-assets, have the poten­ti­al to enhan­ce the effi­ci­en­cy of the pro­vi­si­on of finan­ci­al ser­vices, but may also gene­ra­te risks to finan­ci­al sta­bi­li­ty, if they are adop­ted at a signi­fi­cant sca­le. While such finan­ci­al sta­bi­li­ty risks are cur­r­ent­ly limi­ted by the rela­tively small sca­le of the­se arran­ge­ments, this could chan­ge in the future. Sta­ble­co­ins are an attempt to address the high vola­ti­li­ty of “tra­di­tio­nal” cryp­to-assets by tying the stablecoin’s value to one or more other assets, such as sover­eign cur­ren­ci­es. They have the poten­ti­al to bring effi­ci­en­ci­es to payments (inclu­ding cross-bor­der payments), and to pro­mo­te finan­ci­al inclu­si­on. If wide­ly adop­ted, howe­ver, a sta­ble­coin could beco­me sys­temi­cal­ly important in and across one or many juris­dic­tions, inclu­ding as a payments infra­st­ruc­tu­re. Ensu­ring the appro­pria­te regu­la­to­ry approach wit­hin juris­dic­tions and inter­na­tio­nal­ly will the­re­fo­re be important.

Against this back­ground, the G20 man­da­ted the FSB in June 2019 to exami­ne regu­la­to­ry issu­es rai­sed by ”glo­bal sta­ble­coin” arran­ge­ments (GSCs) and to advi­se on mul­ti­la­te­ral respon­ses as appro­pria­te, taking into account the per­spec­tive of EMDEs. In Febru­ary 2020, the G20 rei­tera­ted the impor­t­an­ce of eva­lua­ting and appro­pria­te­ly addres­sing the risks of GSC arran­ge­ments befo­re they com­mence ope­ra­ti­on and sup­por­ted the FSB’s efforts to deve­lop regu­la­to­ry recom­men­da­ti­ons with respect to the­se arran­ge­ments.

In respon­se to the­se requests, this con­sul­ta­ti­ve docu­ment pro­po­ses 10 high-level recom­men­da­ti­ons that are addres­sed to aut­ho­ri­ties at juris­dic­tio­nal level to advan­ce con­sis­tent and effec­tive regu­la­ti­on and super­vi­si­on of GSC arran­ge­ments. This docu­ment also high­lights key inter­na­tio­nal finan­ci­al regu­la­to­ry stan­dards from BCBS, FATF, CPMI and IOSCO that could app­ly to GSCs. The­se recom­men­da­ti­ons focus on finan­ci­al regu­la­to­ry and super­vi­so­ry issu­es rela­ting to pri­va­te­ly-issued GSCs pre­do­mi­na­te­ly inten­ded for retail use. Wider issu­es such as mone­ta­ry poli­cy, mone­ta­ry sover­eign­ty, cur­r­en­cy sub­sti­tu­ti­on, data pri­va­cy, com­pe­ti­ti­on, and taxa­ti­on issu­es are bey­ond scope. .….

» get the ent­i­re docu­ment here