The G20’s Financial Supervisory Board (FSB) has made 10 recommendations for properly regulating stablecoins, the digital currencies pegged to fiats or other traditional assets.
In a report published on Tuesday, the G20 supervisory body has pointed out the risks associated with stablecoins, but also pointed out the nature of the risks could change over time.
The body seeks regulations on the sector which are “proportionate to the risks, and stress the need for flexible, efficient, inclusive, and multi-sectoral cross-border cooperation, coordination and information-sharing arrangements that take into account the evolution of ‘global stablecoin’ arrangements and the risks they may pose over time.”
The recommendation also stressed on a single framework for all such stablecoins irrespective of the underlying blockchain technology and calls for a “same business – same risks – same rules.”
Regulating stablecoins – a priority for global regulators
The FSB’s recommendations came following a call by the G20 to study the regulatory hurdles faced by the several “global stablecoin” projects.
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Though regulators were reluctant to regulate stablecoins or digital currencies in general, Facebook’s proposal to launch Libra, a stablecoin backed by a basket of assets, made the drafting of regulations at the priority list.
Many top regulatory agencies believe that, if launched, Libra has the potential to disrupt the existing monetary system, given the sheer reach of the social media platform.
“The activities associated with ‘global stablecoins’ and the risks they may pose can span across banking, payments and securities/investment regulatory regimes both within jurisdictions and across borders,” the FSA warned.
The body also emphasized the importance of an “appropriate regulatory approach within jurisdictions across sectors and borders” to tackle such threats.
Meanwhile, many regulators are also studying the feasibility of launching central bank digital currencies, in response to the rising demand for the digital form of money.