Friday, May 24, 2024

FSB Releases High-Level Recommendations for Global Stablecoin Regulation

The Financial Stability Board (FSB) has published a comprehensive report outlining key recommendations for the regulation, supervision, and oversight of global stablecoin (GSC) arrangements. The report aims to address potential financial stability risks posed by GSCs at both the domestic and international level.

The FSB emphasizes the need for authorities to possess and utilize the appropriate powers and tools to regulate, supervise, and oversee a GSC arrangement and its associated functions and activities effectively. This includes the issuance, redemption, and stabilization of the value of the coins; transfer of coins; and interaction with coin users for storing and exchanging coins.

The report also underscores the importance of comprehensive oversight of GSC activities and functions. It recommends that authorities apply regulatory, supervisory, and oversight requirements consistent with international standards to GSC arrangements based on their functions and risks.

In the context of increasing globalization and interconnectedness of financial markets, the FSB highlights the critical role of cross-border cooperation, coordination, and information sharing among authorities. This cooperation is seen as essential to ensure comprehensive regulation, supervision, and oversight of a GSC arrangement across borders and sectors.

The FSB also calls for GSC arrangements to have a comprehensive governance framework with clear and direct lines of responsibility and accountability for all functions and activities within the GSC arrangement.

Although the report focuses on financial stability risks, it acknowledges that it does not cover other important issues related to stablecoins, including anti-money laundering, data privacy, cybersecurity, consumer and investor protection, market integrity, competition policy, taxation, and monetary policy.

To tackle these issues, the FSB suggests a comprehensive supervisory and regulatory framework for GSC arrangements.

The FSB’s recommendations are intended to be flexible to accommodate the wide variety of regulatory frameworks potentially applicable to GSCs around the world.

The FSB also plans to conduct a review of the implementation of these recommendations by the end of 2025 to determine whether further review or action is necessary.

Image source: Shutterstock

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