Financial Stability Institute calls for uniform stablecoin regulation

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On Tuesday, the Financial Stability Institute released a report highlighting the importance of establishing consistent regulatory guidelines for stablecoins among various nations.

The Financial Stability Institute, a partnership between the Bank for International Settlements (BIS) and the Basel Committee on Banking Supervision, highlighted the importance of uniform policies in strengthening the worldwide financial system.

According to the report, stablecoins could be without regulation or only lightly regulated in certain countries.

Written by Juan Carlos Crisanto, Deputy Chair of FSI, and senior advisors Johannes Ehrentraud and Denise Garcia Ocampo, this paper highlights how despite similarities in regulatory topics, significant disparities primarily arise from the distinct features and perceived hazards of stablecoins. The text asserts that these variations could potentially threaten financial stability on a global scale.

Within different regulatory frameworks, emerging stablecoin regulations pursue a unified set of goals including market trustworthiness, consumer advocacy, and monetary security, all while promoting progress in electronic payment systems. #FinancialStabilityInstitute)

— Bank for International Settlements (@BIS_org) April 9, 2024

For several years, countries have been working to establish regulations for stablecoins. In 2023, the U.K. acknowledged stablecoins as a valid payment method. Meanwhile, the European Union passed the Markets in Crypto Assets (MiCA) regulation to govern stablecoin transactions.

In simpler terms, Japan has passed new rules, while the US is considering similar steps. The Financial Stability Institute’s research reveals that there are differing definitions and classifications of stablecoins, as well as inconsistent requirements for disclosing reserve assets by issuers. This discrepancy could potentially threaten financial security.

The report recommends a unified regulatory framework across the globe to minimize risks, avoid regulatory discrepancies, and maintain equity in the digital asset market. Additionally, it highlights the significance of making stablecoins compatible with central bank digital currencies (CBDCs) and other digital assets, thereby fostering a harmonious financial infrastructure.

International organizations such as the International Monetary Fund (IMF) and the Financial Stability Board (FSB) advocate for the establishment of worldwide guidelines. These entities propose or oversee the creation of consistent regulations for stablecoins to ensure their stability.

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2024-04-09 18:11