The Financial Stability Board (FSB) has published its final Report and High-level Recommendations on regulation, supervision and oversight of global stablecoin arrangements. In the Report, the FSB provides the following definitions:
Stablecoin: a crypto-asset that aims to maintain a stable value relative to a specified asset, or a pool or basket of assets. It may also employ algorithmic or other means to stabilise or impact its market value.
Global stablecoin (GSC): a stablecoin with a potential reach and adoption across multiple jurisdictions and the potential to achieve substantial volume, thus posing financial stability risks, rather than a specific legal or regulatory concept.
The high-level recommendations are the following:
1. Authorities should have and utilise the necessary powers and tools, and adequate resources, to comprehensively regulate, supervise, and oversee a GSC arrangement and its associated functions and activities, and enforce relevant laws and regulations effectively;
2. Authorities should apply comprehensive regulatory, supervisory and oversight requirements and relevant international standards to GSC arrangements on a functional basis and proportionate to their risks;
3. Authorities should cooperate and coordinate with each other, both domestically and internationally, to foster efficient and effective communication and consultation in order to support each other in fulfilling their respective mandates and to ensure comprehensive regulation, supervision, and oversight of a GSC arrangement across borders and sectors;
4. Authorities should ensure that GSC arrangements have in place a comprehensive governance framework with a clear allocation of accountability for the functions and activities within the GSC arrangement;
5. Authorities should ensure that GSC arrangements have effective risk management frameworks in place especially with regard to reserve management, operational resilience, cyber security safeguards and AML/CFT measures, as well as “fit and proper” requirements;
6. Authorities should ensure that GSC arrangements have in place robust systems for collecting, storing and safeguarding data;
7. Authorities should ensure that GSC arrangements have appropriate recovery and resolution plans;
8. Authorities should ensure that GSC arrangements provide users and relevant stakeholders with comprehensive and transparent information necessary to understand the functioning of the GSC arrangement, including with respect to its stabilisation mechanism;
9. Authorities should ensure that GSC arrangements provide legal clarity to users on the nature and enforceability of any redemption rights and the process for redemption, where applicable;
10. Authorities should ensure that GSC arrangements meet all applicable regulatory, supervisory and oversight requirements of a particular jurisdiction before commencing any operations in that jurisdiction, and adapt to new regulatory requirements as necessary.