BIS Calls for Immediate Global Regulation of Stablecoins
The Bank for International Settlements (BIS) has highlighted the importance of global regulation of stablecoins. According to a survey across eleven jurisdictions, BIS identified regulatory fragmentation as a major obstacle to the adoption of stablecoins.
BIS urged for urgent regulation of these digital assets due to the risks associated with the lack of a unified regulatory framework. It emphasized that this fragmentation could impede the integration of stablecoins into the global monetary system.
Despite the potential of stablecoins, disparate regulations in different countries hinder their widespread use. Various nations have developed regulatory strategies such as issuer authorization, reserve requirements, risk management, and anti-money laundering measures. However, challenges exist in harmonizing stablecoin regulations across jurisdictions, with different frameworks categorizing them as banking, securities, services, or payment instruments.
The varying rules extend to redemption policies and the definition of stablecoins, with some countries treating algorithmic stablecoins differently. BIS attributed these differences to diverse design features and perceived risks associated with stablecoins.
BIS Identifies Gaps in Global Stablecoin Regulation
The BIS report also addresses the challenges in regulating stablecoins, including differences in reserve management and custody requirements among jurisdictions. For example, the UK mandates reserves to be held in a statutory trust. The report also points out variations in audit and liquidity standards across regions.
While there is consistency in technological and security guidelines, the BIS calls for further examination of how stablecoins interact with other digital assets like central bank digital currencies and tokenized funds to fully understand their impact on the global monetary system.
The push for harmonized regulation follows BIS’s earlier recommendations on stablecoin regulation in February, aligning with the International Monetary Fund and the Financial Stability Board.
John Deaton Critiques Senator Warren’s Crypto Views
John Deaton, a pro-crypto attorney, criticized Senator Elizabeth Warren’s apprehensions about stablecoins entering the banking system. Warren expressed concerns about security and national security threats, suggesting that new laws may exacerbate these risks rather than mitigate them.
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