Global watchdogs set out guidance on regulating stablecoins

As digital assets are increasingly affecting the financial system, international regulators are taking the first step towards overseeing Stablecoin.

Authorities reported on Wednesday that stablecoin operators, which act as a bridge between national currencies and crypto markets, should be regulated as a financial market infrastructure alongside payment systems and clearinghouses. Said. This rule applies to Stablecoin, which regulators have determined is systemically important and can disrupt payments.

International Organization of Securities Commissions — A governing group of financial regulators and the Bank for International Settlements’ Settlement and Market Infrastructure Commission to establish oversight of the fast-growing $ 130 billion stablecoin market. Has launched a global initiative. ..

Sir John Kanriff, Chair of CPMI, said: “This is happening at the same time that financial innovation offers new payment services and the prospect of intensifying competition for payments, but there are also potential risks to the financial system,” he added.

Stablecoin is a cryptocurrency token that runs on blockchain technology. Operators say it is a relatively easy and quick way for traders to get in and out of speculative currencies such as Bitcoin, as it is fixed one-to-one with underlying assets such as the dollar. However, their rapid growth and limited transparency are closely monitored.

According to the report, regulators did not intend to create additional standards for stablecoin. Instead, they planned to build on the principles created in 2012 for critical financial market infrastructure.

The author of the report recommended principles that can be applied to digital assets that are considered systemically important. These principles included governance requiring clear disclosure of Stablecoin’s management structure and arrangements with affiliates.

Stablecoin should have “little or no credit or liquidity risk” and there are reports warning that customers will be exposed if Stablecoin breaks the pegs. He also advised that the stablecoin regulatory framework should consider whether the holder is making a legal claim against the issuer or underlying asset.

Different stablecoin operators have different baskets of assets that support the coins. Tether holds more than $ 30 billion in commercial paper, a type of short-term debt. 7th largest holder of paper in the world. However, it does not reveal the name or location of the company that holds the debt it holds.

Rating agency Fitch released a large amount of commercial paper owned by stablecoin operators in July Cause transmission If it is revealed for any reason, in the credit market.

Others are feeling regulatory pressure. Facebook’s stablecoinDiem (formerly known as Libra) struggled to get going, but said it in August. The digital currency wallet Novi was ready to go on sale.

The role of Stablecoins has received more urgent global regulatory attention this year. The Basel Committee on Banking Supervision, the world’s strongest banking standard setter, said it is discussing capital requirements with banks. The Biden administration is reportedly considering bank-like regulations on businesses.

Another report from BIS last week Private digital assets may co-exist with potential central bank digital currencies However, the significant adoption of Stablecoin can lead to fragmentation and “excessive market power”.

Discussions on the proposed framework on Wednesday will last for eight weeks. CPMI and Iosco can work with other standards-setting bodies to close regulatory gaps.

Global watchdogs set out guidance on regulating stablecoins Source link Global watchdogs set out guidance on regulating stablecoins

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