– The Financial Stability Board (FSB) has released new crypto guidelines for regulators.
– The guidelines propose that every stablecoin issuer must obtain a local license before operating in a jurisdiction.
– The FSB defines a global stablecoin (GSC) as a coin that serves as a means of payment and storage and has the potential for adoption across multiple jurisdictions.
– Local authorities should have the power to regulate, supervise, oversee, and prohibit stablecoin activities in their jurisdiction.
– Stablecoin issuers should have a governing body and comply with risk management, anti-money laundering, and data privacy requirements.
– Stablecoins should not rely on arbitrage activities or algorithms to maintain a stable value.
– The reserve assets backing stablecoins should exclude volatile assets and meet or exceed the amount of stablecoins in circulation.
– GSC issuers, subject to oversight equivalent to commercial banks, may have exceptions to the 1:1 reserve assets rule.
– GSC issuers should obtain a license in every jurisdiction they operate in.
– The license requirement raises concerns about the potential disruption of popular stablecoins and regulatory arbitrage.
The latest guidelines from the Financial Stability Board (FSB) introduce some significant proposals for stablecoin issuers. One of the most notable demands is the requirement for stablecoin issuers to obtain a local license before conducting operations in a specific jurisdiction. This proposal raises several questions and concerns, including the potential disruption of popular stablecoins and the challenges of fulfilling licensing requirements in multiple jurisdictions.
The FSB’s guidelines also define global stablecoins (GSC) as coins that serve as a means of payment and storage and have the potential for adoption across multiple jurisdictions. According to the guidelines, local authorities should have the powers and capabilities to regulate, supervise, oversee, and prohibit stablecoin activities in their jurisdiction.
To ensure control and accountability, the FSB suggests that GSC providers establish a governance framework, including a governing body. Compliance with risk management, anti-money laundering, and data privacy requirements is also emphasized.
The guidelines state that stablecoins should not rely on arbitrage activities or algorithms to maintain a stable value. Instead, they should have reserve assets that exclude speculative and volatile assets and meet or exceed the amount of stablecoins in circulation at all times.
However, there is an exception to the 1:1 reserve assets rule for GSC issuers subject to oversight equivalent to commercial banks.
Lastly, the guidelines emphasize the need for GSC issuers to obtain a license in every jurisdiction they operate in. This requirement raises concerns about potential disruptions in the market and regulatory arbitrage where stablecoin trading may be frozen in jurisdictions awaiting licensing.
While the FSB’s recommendations are influential, it remains uncertain if they have enough power to achieve full cross-border integration of regulations. Some experts believe that the speed at which assets move on-chain warrants a more cautious approach to stablecoin regulation, while others see the potential value and opportunity for new players in the market.
Ultimately, the FSB’s new guidelines aim to establish a regulatory framework for stablecoins, but their implementation and impact on the market are yet to be seen.
