IOSCO published a statement, after its end-of-the-October meeting in Madrid, with regard to the emerging global stablecoin proposals. The Board met, among other things, to consider the risks and benefits arising from stablecoin initiatives with a potential global reach and how securities market regulation may apply to such initiatives. An assessment of the IOSCO FinTech Network concluded that a case-by-case approach is needed to understand what regulations and regulatory regimes would apply.
IOSCO has examined a number of these initiatives this year. The IOSCO Board acknowledges that stablecoins can potentially offer benefits to market participants, consumers, and investors. However, it is also aware of potential risks in a number of areas, including consumer protection, market integrity, transparency, conflicts of interest, financial crime, and potential systemic risks. To support its discussions, the IOSCO FinTech Network produced an assessment of how IOSCO Principles and Standards could apply to global stablecoin initiatives. The detailed assessment concluded that a case-by-case approach is needed to establish which IOSCO Principles and Standards, and national regulatory regimes, would apply. A detailed understanding of how a particular proposed stablecoin is expected to operate is therefore needed, including the rights and obligations it confers on participants and the continuing obligations of the sponsor.
Ashley Alder, Chair of the IOSCO Board, is of the view that stablecoins can include features that are typical of regulated securities. Therefore, certain IOSCO Principles and Standards may apply to stablecoins depending on how they are structured, including those related to disclosure, registration, reporting, and liability for sponsors and distributors. According to a statement by the IOSCO Chair, IOSCO "encourage[s] international collaboration, so the risks relating to stablecoins can be identified and mitigated and the potential benefits realized." Mr. Alder adds: "It is important that those seeking to launch stablecoins, particularly proposals with potential global scale, engage openly and constructively with all relevant regulatory bodies where they may be seeking to operate. In addition to supporting the work of the FSB, the IOSCO FinTech Network will continue its assessment and consideration of global stablecoin initiatives. The Network will also facilitate information sharing between securities market regulators on such proposals.”
Related Link: IOSCO Statement (PDF)
Keywords: International, Banking, Securities, Stablecoin, Digital Currency, Fintech Network, G20, G7, Fintech, FSB, IOSCO
Previous ArticleIFSB Consults on Revised Capital Adequacy Standard for Islamic Banks
HKMA announced the publication of a report on fintech adoption and innovation in the banking industry in Hong Kong.
BIS published a working paper that examines the drivers of cyber risk, especially in context of the cloud services.
ECB launched consultation on a guide specifying how the Banking Supervision expects banks to consider climate-related and environmental risks in their governance and risk management frameworks and when formulating and implementing their business strategy.
ECB published an opinion (CON/2020/16) on amendments to the prudential framework in EU in response to the COVID-19 pandemic.
EBA published a report that examines the interlinkages between recovery and resolution planning under the Bank Recovery and Resolution Directive (BRRD).
SRB published the final Minimum Requirements for Own Funds and Eligible Liabilities (MREL) policy under the Banking Package.
EIOPA published its risk dashboard based on Solvency II data from the fourth quarter of 2019.
MNB published a statement on loan payments post the announced moratorium, in addition to a set of new questions and answers (Q&A) on supervisory measures and requirements announced amid COVID-19 pandemic.
EBA updated the Single Rulebook question and answer (Q&A) tool for banks.
US Agencies (FDIC, FED, and OCC) published an interim final rule that temporarily revises the supplementary leverage ratio calculation for depository institutions.