The Financial Stability Board (FSB) has published a comprehensive report outlining key recommendations for the regulation, supervision, and oversight of global stablecoin arrangements (GSCs). The report aims to address the potential risks to financial stability posed by GSCs both domestically and internationally.

The FSB emphasizes the need for authorities to possess and use the appropriate powers and tools to regulate, supervise and police a GSC arrangement and its associated functions and activities effectively. This includes the issuance, redemption and stabilization of the value of coins; coin transfer; and interaction with coin users to store and exchange coins.

The report also stresses the importance of comprehensive oversight of the GSC’s activities and functions. It recommends that authorities apply regulatory, supervisory and oversight requirements consistent with international standards to GSC arrangements based on their functions and risks.

In the context of the increasing globalization and interconnectedness of financial markets, the FSB stresses the fundamental role of cross-border cooperation, coordination and information exchange between authorities. This cooperation is considered essential to ensure comprehensive regulation, supervision and oversight of a GSC arrangement across borders and sectors.

The FSB also requests that GSC agreements have a comprehensive governance framework with clear and direct lines of responsibility and accountability for all functions and activities within the GSC agreement.

Although the report focuses on risks to financial stability, it acknowledges that it does not cover other important issues related to stablecoins, such as money laundering, data privacy, cybersecurity, consumer and investor protection, market integrity, competition policy, tax and monetary policy. .

To address these issues, the FSB suggests a comprehensive regulatory and supervisory framework for GSC deals.

The FSB recommendations are intended to be flexible to accommodate the wide variety of regulatory frameworks potentially applicable to GSCs around the world.

He FSB too plans to conduct an implementation review of these recommendations by the end of 2025 to determine if further review or action is necessary.

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