- The FSB has published 10 recommendations that it says authorities should consider when it comes to controlling stablecoins
- These guidelines are meant to ensure that private stablecoins are covered by financial law in all jurisdictions
- Facebook’s Libra has forced authorities to plan for an influx of private currencies
The Financial Stability Board (FSB) yesterday published a series of recommendations on the potential global uptake of stablecoins. According to the FSB, the 10 “high-level” recommendations aim to “promote coordinated and effective regulation, supervision and oversight” in order to address “the financial stability risks” posed by stablecoins, both in the private and public sphere.
FSB Wants to Plug Gaps in the Law
The FSB’s 10 recommendations focus around the importance of authorities in retaining regulatory control on stablecoins available to citizens, stating they should “have and utilise the necessary powers and tools” to regulate stablecoins, with the action they take being “proportionate to their risks”.
The FSB also recommends that authorities should work together both domestically and internationally to come up with cohesive action plans to avoid bad actors slipping through the net from country to country.
They also state that any stablecoin operator wanting to offer their product must ensure that they “meet all applicable regulatory, supervisory and oversight requirements” before they are allowed to launch their product.
Libra the Driving Force Behind Change
The tone of the publication centers very much around private stablecoins like Facebook’s Libra project, which looks set to launch in 2021. The prospect of a currency-backed stablecoin like Libra being used by billions of people on a private platform has forced the hands of central banks to rush through regulatory proposals and also look into their own Central Bank Digital Currencies (CBDC).
The FSB warns that existing national laws do not cover stablecoins like Libra in their current state, and that its proposed guidelines will help authorities ensure that stablecoins are fully accountable, have effective safeguards against illegal use, keep data safely, and are safe from cyber attacks.
The FSB adds that regulators will report by December 2021 on whether rule changes are needed with regard to stablecoins, and a review of how stablecoins are being regulated will be completed by July 2023.