The Bank for International Settlements has proposed recommendations for global stablecoin regulation.
In a summary of recommendations released on Thursday, BIS described GSC as a widely adopted stablecoin with potential reach and use across multiple jurisdictions. “GSCs may become systemically important in more than one jurisdiction,” BIS said.
Recommendations for GSC preparation
The BIS summary outlines key recommendations to address the financial stability risks posed by GSCs at domestic and international levels.
The recommendations also aim to support GSC innovation and provide flexibility for jurisdictions to implement domestic approaches.
Some of the key recommendations call for global jurisdictions to prepare to regulate and oversee global stablecoin contracts, with a focus on cross-border cooperation, coordination and information sharing.
Risk Management Recommendations
The recommendations outline priorities for global authorities to ensure that the GSC risk management framework is effective.
“A risk management framework must be in place that comprehensively addresses all material risks associated with its functions and activities, particularly in relation to operational resilience, cybersecurity safeguards and anti-money laundering/countering the financing of terrorist actions. ‘Appropriate’ requirements must be in place as applicable. “It is consistent with the laws and regulations of the jurisdiction,” BIS added.
Key areas of the summary of recommendations also focus on data storage and data access, redemption rights and soundness requirements.
In summary, the BIS said that while stablecoins have the potential to improve the efficiency of how financial services are delivered, they “may also pose risks to financial stability.”
BIS said: “The recommendations seek to promote consistent and effective regulation, oversight and supervision of GSCs and stablecoins with the potential to become GSCs across jurisdictions. These recommendations also address the priorities of their underlying activities and risks. “We emphasize a technology-neutral approach to specifying ,” BIS added.
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