Stablecoins Muhammed AKAN / Shutterstock
A report released Wednesday by global regulators stated that stablecoins should adhere to the same principles as traditional markets.
We will assess the risks associated with the coins, their markets and the use cases.
G7, G20, and Financial Stability Board believe that stablecoins are suitable for cross-border payments.
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Global regulators have stated that stablecoins must follow the same standards as traditional payment methods and should be subject to the strict same rules, a report released Wednesday.
The Committee on Payments and Market Infrastructures' (CPMI), and the International Organisation of Securities Commissions' (IOSCO), released their reports. They set standards for stablecoins in governance, risk management and guaranteeing settlement payments.
The world's regulators and central banks have been looking at ways that stablecoins could be used to support central bank digital currencies (CBDCs). CBDCs will be created and managed by central banks and would offer a centralized, tightly governed alternative to bitcoin, the most popular cryptocurrency.
G7, G20, and the Financial Stability Board believe that stablecoins could be used to facilitate cross-border payments. These international organizations asked the CPMI (International Organization for Standardization of Currency) to establish standards for stablecoin arrangements.
The report stated that "With the emergence stablecoins," the international regulatory community sought to better understand these new entrants as well as the potential risks they could pose to the financial sector.
In that order, the two largest stablecoins in terms of market capitalization are circle (USDC) and tether (USDT). Regulators have been looking into the issuers of both currencies in recent months. The US Securities and Exchange Commission issued an "investigative Subpoena" Tuesday to Circle Financial, the USD coin issuer.
In July, Circle received a subpoena asking for information about Circle's "holdings and customer programs" as well as its operations. Tether caused a bit of anxiety among investors by publishing a breakdown of its reserves, which showed that its tether stablecoin was supported by a lower percentage of dollars than previously believed.
IOSCO stated that it is important to be clear about who is responsible for the stablecoin rules. They should also be able to exchange them for other assets in a matter of hours. It suggested that those making arrangements for stablecoins should have good accounting practices, safekeeping procedures and internal legal controls. They should also avoid defaulting on payments.
