The Financial Stability Board (FSB) is anticipated to unveil its high-level guidelines for the regulation of stablecoins in the upcoming months. These guidelines aim to enhance governance structures, redemption rights, and stabilization mechanisms for stablecoins, which are cryptocurrencies pegged to the value of various assets, such as the US dollar or euro. However, FSB Chair Klaas Knot has cautioned that many current stablecoins may fail to comply with these international standards, necessitating additional measures to ensure financial stability.
Regulators globally have ramped up their oversight of payments-oriented stablecoins, many of which are supported by fiat currency reserves or unsecured short-term debt. Despite attempts by stablecoin issuers to lessen dependence on private debt and boost transparency, Knot’s remarks indicate that further action may be required. In fact, Knot has pointed out that current stablecoins may not align with international benchmarks established by payments or securities standard authorities.
In February 2022, the FSB alerted to the fast-growing crypto-related risks to financial stability. This, coupled with the downfall of several companies within the crypto sector, has driven regulators to enhance their supervisory efforts. The FSB intends to finalize its recommendations for regulating cryptocurrencies and stablecoins by July 2023. Furthermore, it will work alongside other standard-setting organizations to explore regulatory approaches for decentralized finance (DeFi), and plans to produce a paper with the International Monetary Fund (IMF) addressing regulatory concerns associated with cryptocurrencies.
The anticipated release of recommendations from international standard-setting bodies regarding the regulation of cryptocurrencies and stablecoins is set for July 2023.
Source:
https://www.fsb.org/wp-content/uploads/P200223-1.pdf
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