New FSB Statement on Stablecoin Regulation for G20 MembersKlaas Knot, Chairman of the Financial Stability Board (FSB), issued a statement on StableCoins to G20 finance ministers and central bank governors. He noted that many existing stablecoins would not meet the "high level" recommendations. He was referring to the regulatory rules that will soon be established by the world's key financial regulators.
The FSB's forthcoming guidance will focus on strengthening and normalizing the framework for stablocoin governance, redemption rights and mechanisms for this asset class. According to the 2023 plan, published on February 20, 2023, the FSB planned to finalize a document with recommendations for the regulation of cryptocurrencies and stablecoins by July of this year.
Today's letter notes: Supervisors around the world have been actively taking steps to control stable coins, most of which are backed by fiat currency reserves in the form of cash equivalents or unsecured short-term debt. At the same time, while stabilitycoin issuers have been concerned about reducing private debt from their reserves and increasing transparency, the FSB has assured that current efforts are not enough.
Knott added that many existing Stablecoins could be banned. It is already clear that they do not meet the international norms set by the developers of traditional payments and securities standards.
Back in February 2022, the FSB warned cryptocurrencies and investors that financial stability risks "could increase significantly." Regulators have significantly increased their efforts to oversee the digital currency industry following the collapse of Project Terra and the FTX cryptocurrency exchange. In addition, the organization is concerned about overseeing the decentralized finance (DeFi) sector.
