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IOSCO and the BIS committee have released guidelines for the regulation of stablecoin agreements.

15-Jul-2022 By: Simran Mishra
IOSCO and the BIS co

IOSCO and the BIS committee have released guidelines for the regulation of stablecoin agreements.

By applying ten-year-old regulations to the quickly developing new financial technology, international organisations confirm the "same risk, same regulation" premise.

The publication of fresh guidance on stablecoin arrangements on Wednesday provided additional evidence that the idea of "same risk, same regulation" applied to cryptocurrencies (SAs). The guidelines, released by the International Organization of Securities Commissions (IOSCO) and the Committee on Payments and Market Infrastructures (CPMI) of the Bank for International Settlements (BIS), apply the Principles for Financial Market Infrastructures (PFMI) to systemically important SAs that transfer stablecoins.

The document extends the PFMI standards to SAs without creating additional standards and is designed for use by SA designers and operators.

"An arrangement that combines a range of functions to offer an instrument that purports to be used as a means of payment and/or store of value," is how it describes a stablecoin arrangement. Since it only covers SAs that are "systemically vital," the guideline offers suggestions for figuring out which SAs are protected.

In response to the financial crisis of 2008, the PFMI were developed and released in 2012. The revised guideline states that all requirements apply to SAs, but only four of the 24 principles and essential considerations—governance, risk management, settlement finality, and money settlements—were elaborated on by the writers. They mentioned the release of a separate work to address multicurrency SAs.

In a statement released on Wednesday, Caroline D. Pham, a commissioner with the United States Commodity Futures Trading Commission and co-chair of the CPMI-lOSCO Policy Standing Group, said that the report was a significant step toward establishing global standards for stablecoin arrangements and a unified regulatory framework that protects the world financial system.

Stablecoin regulation is also being worked on by other entities. In October, the Financial Stability Board is anticipated to suggest global standards for stablecoins. The Stablecoin TRUST Act has been introduced in the United States in an effort to control stablecoin and include them into the financial system.


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