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
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