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FSB releases recommendations to regulate 'Global Stablecoins'

PAR002_123 • Oct 16, 2020

The Financial Stability Board (FSB) published its G20 recommendations on Global Stablecoins (GSCs), suggesting new standards for global regulations are to be set by mid-2022


The Financial Stability Board (FSB) has published the final version of its high-level recommendations for the regulation, supervision and oversight of “global stablecoin” (GSC) arrangements. 


The report comes just days after the BIS partnered with several central banks to release a report on the principles and core features of CBDCs (Central Bank Digital Currencies) that other central banks globally must adhere to.


The report states that GSC arrangements are expected to adhere to all applicable regulatory standards and to address risks to financial stability before commencing operation, and to adapt to new regulatory requirements as necessary.


Some of the recommendations also stress the value of flexible, efficient, inclusive, and multi-sectoral cross-border cooperation, coordination, and information sharing arrangements among authorities.


regulation, supervision and oversight of “global stablecoin” (GSC) arrangements


The FSB has agreed to the following further actions as a key building block of the roadmap to enhance cross-border payments commissioned by the G20:

  • Completion of international standard-setting work by December 2021.
  • Establishment or, as necessary, adjustment of cooperation arrangements among authorities by December 2021 (and as needed based on market evolution).
  • At a national level, establishment or, as necessary, adjustment of regulatory, supervisory and oversight frameworks consistent with the FSB recommendations and international standards and guidance by July 2022 (and as needed based on market evolution).
  • Review of implementation and assessment of the need to refine or adapt international standards by July 2023.


FSB's 10 recommendations for regulating Global Stablecoin data safeguards

The FSB has agreed on 10 high-level recommendations that promote coordinated regulation, supervision and oversight of global stablecoin arrangements both at the domestic and international level.

Operating on the 'same business, same risk, same rules' principle, the FSB intends to complete international standard-setting work by December 2021, with the rules expected to apply in domestic markets by July 2022.

In a warning shot to Facebook's Libra, the report makes clear that Global Stablecoin arrangements must adhere to all applicable regulatory standards before commencing operation.

FSB's 10 recommendations for regulating Global Stablecoin data safeguards

Some of the recommendations on the 73-page report included the need for clear allocation of accountability, the importance of risk management frameworks in regards to AML/CFT and cybersecurity safeguards, the need for robust data collection and storage systems, recovery and resolution plans and legal clarity regarding redemption rights for the users.


The report is intended to primarily address risks to financial stability and therefore does not cover important issues such as money laundering or terrorist financing, data privacy, cyber security consumer and investor protection and competition, which however could have consequences for financial stability if they are not properly addressed. It therefore stresses the importance of addressing these issues as part of a comprehensive effective supervisory, regulatory and oversight framework.


Regulators for bank capital and anti-money laundering will report by December 2021 on whether rule changes are needed. The FSB added that a review of how stablecoins are being regulated will be completed by July 2023.



Source:


Regulation, Supervision and Oversight of “Global Stablecoin” Arrangements Final Report and High-Level Recommendations

https://www.fsb.org/wp-content/uploads/P131020-3.pdf


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