FSB Outlines Work to Consider Regulatory Issues of Stablecoins

The note explains that an effective regulatory and supervisory approach needs to be able to identify, monitor, and address potential risks in a reasonable range of scenarios and use cases. Such an approach requires a clear understanding of the individual components of a stablecoin arrangement and their interaction, including from a legal point of view. These components could include entities or structures involved in issuing stablecoins; entities or structures that manage assets linked to the coins; infrastructure for transferring coins; market participants or structures facing users (for example, platforms or exchanges, wallet providers) and the governance structure for the arrangement. The governance structure could include the role and responsibilities of a possible governance body and the underlying stabilization mechanism used for the stablecoin.

To implement the G20 mandate and to build on the earlier work of the G7, FSB will:

• Take stock of existing supervisory and regulatory approaches and emerging practices in this field, with a focus on cross-border issues while taking into account the perspective of emerging markets and developing economies. In light of existing national regulatory and supervisory frameworks, individual authorities may consider different approaches toward stablecoin arrangements.
• Consider, based on the stocktake, whether existing supervisory and regulatory approaches are adequate and effective in addressing financial stability and systemic risk concerns that could arise from the individual components of a stablecoin arrangement or their interaction as an ecosystem. This may include questions about how the existing national regulatory and supervisory frameworks interact to ensure that risks can be identified and addressed wherever the individual components of a stablecoin arrangement may be located jurisdictionally. It would also involve considering to what extent different regulatory classifications of stablecoins under existing national regimes or supervisory approaches could give rise to regulatory arbitrage and how national regulatory and supervisory authorities need to coordinate to ensure effective regulatory and supervisory oversight and address any risk of regulatory arbitrage.

• Advise on possible multilateral responses, if deemed necessary, including developing regulatory and supervisory approaches to addressing financial stability and systemic risk concerns at the global level. Such challenges could involve the compatibility of national approaches or potential outright gaps resulting from the global nature of stablecoin arrangements. The analysis would also investigate what, if any, actions may be needed to further strengthen cooperation and coordination to address global financial stability and systemic risk concerns.

Related Links

• Press Release
• Note (PDF)

Keywords: International, Banking, Stablecoins, Fintech, Crypto-Asset, Systemic Risk, Regulatory Arbitrage, Governance, FSB