“Recent developments in the cryptoasset market have again brought urgency for authorities to address the potential risks posed by cryptoassets, including stablecoins more broadly,” said Sir Jon Cunliffe, chair of the CPMI and deputy governor for financial stability at the Bank of England, in a release.
“The recent market disruptions, while costly for many, were not systemic events. But they underline the speed with which confidence can be eroded and how volatile cryptoassets can be,” Cunliffe said. “Such events could become systemic in the future, especially given the strong growth in these markets and the increasing linkages between cryptoassets and with traditional finance.”
The final guidance confirms that if a stablecoin performs a transfer function, and is determined to be systemically important, it must adhere to the Principles for Financial Market Infrastructures (PFMI) — measures that were adopted in the wake of the global financial crisis to ensure resilience in the traditional financial system.
The new guidance also addresses specific governance, risk management, and settlement considerations for stablecoins. It also sets out criteria for assessing whether a stablecoin is considered systemically important.
The regulators said that the guidance is a “major step forward” in applying the idea that to the extent that the crypto sector poses the same risk as the traditional financial sector, it should be subject to the same regulation.
“Our risk management, governance and transparency standards for existing financial market infrastructures are stringent. We expect the same level of robustness and strength in these aspects in systemically important stablecoin arrangements,” said Ashley Alder, chair of the IOSCO board and CEO of the Hong Kong Securities and Futures Commission (SFC), in a release.
“This report is a significant step to establish international standards for stablecoin arrangements and a cohesive regulatory framework that safeguards the global financial system,” said Caroline Pham, commissioner at the U.S. Commodity Futures Trading Commission (CFTC), in a statement.
IOSCO and the CPMI said that they will continue to examine regulatory issues associated with stablecoins and will coordinate with other standard setters.