Financial Stability Institute urges standardized regulation for stablecoins
A warning has been issued by the Financial Stability Institute (FSI) regarding the need for uniform regulations for stablecoins across different countries. The FSI, a collaboration between the Bank for International Settlements (BIS) and the Basel Committee on Banking Supervision, emphasized the importance of consistent policies in strengthening the global financial system.
The report, authored by FSI Deputy Chair Juan Carlos Crisanto and Senior Advisors Johannes Ehrentraud and Denise Garcia Ocampo, highlights that while there are common regulatory themes, differences arise from the unique designs and perceived risks of stablecoins. This fragmentation could potentially pose a challenge to global financial stability.
Countries have been grappling with stablecoin regulation for years. The U.K. recently recognized stablecoins as a payment method in 2023, and the European Union implemented the Markets in Crypto Assets (MiCA) regulation to oversee stablecoin activities. Japan has also introduced regulations, while the U.S. is considering similar legislative measures. The FSI’s findings indicate that varying definitions and categorizations of stablecoins, as well as inconsistencies in reserve asset disclosure requirements by issuers, could jeopardize financial stability.
The report calls for a globally consistent regulatory approach to mitigate risks, prevent regulatory arbitrage, and ensure fairness within the digital asset landscape. It also emphasizes the importance of ensuring that stablecoins are interoperable with central bank digital currencies (CBDCs) and other digital assets to promote a cohesive financial ecosystem.
International bodies such as the International Monetary Fund and the Financial Stability Board also support the need for global standards, which would issue or develop universal norms for stablecoins.
