G20: Financial Stability Forum, speaks warning of stablecoins
Leading politicians from the major industrial Nations of the world have gone on the Offensive with regard to the emergence of stable coins that quickly gain a huge user base, and the financial could change the landscape.
The regulatory Commission of the G20 has published a 62-page document with the title “Addressing the regulatory, supervisory and oversight challenges raised by global stablecoin ‘arrangements,” which contains a list of recommendations to control the use of stable coins. The main objective is to design a global strategy for the regulation of the asset class. Stablecoins are a novel class of crypto-currencies, which are tied to assets such as Fiat money and Gold, in order to minimize the price volatility. You can use the Blockchain technology and digitization, in order to allow efficient domestic and cross-border payments. As a store of value, you can also make it easier to trade with crypto currencies by giving you a fixed price, if investors buy coins or sell.
The list of 10 recommendations of the FSB (Financial Stability Forum), which was released on Tuesday, shows that the Central banks are concerned about the plans of Facebook, Libra, introduce a potentially powerful Stablecoin with the ability to compete in cross-border transactions with traditional currencies, and to endanger the Status quo. While the financial market rules, the traditional payments and customer-regulate checks, also for stable-coins are valid, and some of the risks associated with crypto-assets, has identified the FSB of specific problems in cross-border payments with stable coins. The recommended solution is to implement a flexible, cross-border cooperation, which can control these crypto-assets.
To fix the stablecoins-induced vulnerabilities and to ensure that the financial stability is not undermined, recommends to the FSB that regulatory authorities should have the power to activities that are associated with this particular class of crypto-currencies, restrict or prohibit. The authorities within a Jurisdiction should have in place, either independently or collectively, have the appropriate powers and abilities and use this to monitor the activities and services offered to the users in or from their Jurisdiction, and to regulate the risks that can represent these services and activities, to supervise and prohibit, where appropriate, to be effective.
This includes, for example, can include services and activities in connection with the steering/control of the Stablecoin-regulation, the operation of the infrastructure of the Stablecoin-regulation, the issue/redemption of Stablecoins, the management of Stablecoin-reserve assets, the custody/trust of Stablecoin-reserve balances, the trading/exchange of Stablecoins or the storage of keys for access to stable coins“. The regulatory authority also says that Stablecoin operators manage risk, for operating purposes, be resilient, and measures against Cyber-attacks and systems for the mitigation of the financing of terrorism and money laundering must take.
“The competent authorities should, where necessary, the regulatory powers to clarify and identify potential gaps in their national framework, to address the risks posed by GSCs (globalne stablecoins), is appropriate”. The recommendations relating to the most traded crypto-currency, the Stablecoin Tether (USDT), as well as other high-volume traded, stable crypto-currencies, such as USDC, TUSD, PAX, and DAI, will be presented to the leaders of the G20 official.
The full list of recommendations you can read here.
Featured Image: M. W. Hunt | Shutterstock
