The FSB today published a report on the progress made on the implementation of its high-level recommendations for Regulation, Supervision and Oversight of “Global Stablecoin” Arrangements.
The report incorporates the results of a comprehensive stocktake of the implementation of the FSB’s high-level recommendations
in 48 jurisdictions in the FSB and its Regional Consultative Groups,
covering 21 advanced economies and 27 emerging market and developing
economies.
The report notes that the market capitalisation of existing so-called
“stablecoins” has continued to grow over the course of 2020/21.
Overall, however, the implementation of the FSB high-level
recommendations across jurisdictions is still at an early stage.
Jurisdictions have taken, or are considering, different approaches
towards implementing the recommendations. To address the risk of
regulatory arbitrage and harmful market fragmentation and the greater
financial stability risks that could arise were stablecoins to enter the
mainstream of the financial system, effective international regulatory
cooperation and coordination are critical.
The report also notes that standard-setting bodies (SSBs), including
BCBS, CPMI and IOSCO, are assessing whether and how existing
international standards and principles may apply to stablecoin
arrangements and, where appropriate, adjusting them in light of the FSB
high-level recommendations. The report stresses that a number of issues
may not be fully covered by ongoing work and that any gaps in existing
standards and principles should be addressed in a holistic manner that
is coordinated across sectors.
Authorities have identified several issues relating to the
implementation of the recommendations that may warrant further
consideration and where further work at international level could be
useful. These include: conditions for qualifying a stablecoin as a
“global stablecoin” (GSC); prudential, investor protection and other
requirements for issuers, custodians and providers of other GSC
functions (e.g. wallet providers); redemption rights; cross-border and
cross-sectoral cooperation and coordination; and mutual recognition and
deference.
The work on fostering the soundness of GSCs is an important part of the FSB’s Roadmap for enhancing cross-border payments
endorsed by the G20 in October 2020. The FSB will undertake a review of
its recommendations, in consultation with other relevant SSBs and
international organisations. The review, which will be completed in July
2023, will identify how any gaps could be addressed by existing
frameworks and will lead to the update of the FSB’s recommendations if
needed.
The FSB is continuing to monitor closely FinTech developments and
potential financial stability risks, including risks arising from the
growth of crypto-assets and stablecoins in particular.
Notes to editors
The establishment of effective regulatory, supervisory and oversight
approaches for GSC arrangements is a key building block (building block
18) of the FSB’s roadmap to enhance cross-border payments.