Stablecoins 'should meet international payment standards'

The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) have published preliminary guidance for public consultation which suggests stablecoins should observe international standards for payment, clearing, and settlement systems.

In 2019, the Group of Seven and the Financial Stability Board (FSB) conducted work on the impact of global stablecoin arrangements and made recommendations for their supervision and oversight.

Preliminary analysis conducted by CPMI-IOSCO as part of an October 2020 FSB report found that "the Principles for Financial Market Infrastructures (PFMI) apply to stablecoin arrangements that perform systemically important payment system functions or other financial market infrastructure (FMI) functions."

“The payments landscape has undergone rapid transformation in recent years and continues to evolve at pace,” said Sir Jon Cunliffe, chair of the CPMI and deputy governor for financial stability at the Bank of England. “This is happening at the same time as financial innovation offers the prospect of new payment services and greater competition in payments but also potential risks to the financial system.”

He added: “This consultation document is part of an ongoing commitment by the international regulatory community to ensure the principle of 'same risk, same regulation', to identify potential risks and to help develop appropriate oversight to safeguard financial stability.”

Ashley Alder, Chair of the IOSCO Board and chief executive of the Hong Kong Securities and Futures Commission, said that the report marks “significant progress” in understanding the implications of stablecoin arrangements for the financial system and providing clear and practical guidance on the standards they need to meet.

The news comes as the chairman of the Securities Exchange Commission Gary Gensler said that the US does not plan to follow in the footsteps of China, which has banned digital tokens.
“Our approach is really quite different,” he said, in comments reported by The Times. Gensler explained that any ban would need to be legislated by congress.

The CPMI and IOSCO are currently inviting comments on the consultative document.

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