Stablecoins seem to have garnered a lot of attention recently from many in the mainstream media after Facebook launched its own crypto-project, Libra. In fact, regulators are among those who are most interested in the future of Libra and by extension, stablecoins.
This interest was reflected by the latest statement from the International Organization of Securities Commissions [IOSCO]. The statement, released after IOSCO’s Board got together on 30 October, discussed the potential hazards and advantages posed by stablecoins. The financial watchdog, while expanding on the pros and cons of stablecoins, went on to acknowledge that stablecoins could be beneficial to market participants, consumers as well as investors.
Many speculate that IOSCO’s latest statement is a response to Facebook launching Libra, as it claims that stablecoin initiatives like Libra could come under IOSCO Principles and Standards.
The IOSCO FinTech Network reportedly presented an assessment before the IOSCO Board on how stablecoins could comply with the principles and standards of the organization. The statement read,
“The detailed assessment concluded that a case-by-case approach is needed to establish which IOSCO Principles and Standards, and national regulatory regimes, would apply. A detailed understanding of how the particular proposed stablecoin is expected to operate is therefore needed, including the rights and obligations it confers on participants and the continuing obligations of the sponsor. “
Additionally, IOSCO also pointed out the risks associated with stablecoins, including questions of transparency, crime pertaining to the financial sector, etc.
The Chair of the IOSCO Board, Ashley Alder, went on to say that stablecoins may comply with the principles and standards of IOSCO, considering its structure, registration, reporting, and liability for participants. However, he pointed out that global stablecoins would still come under the purview of the public,