Image: Reuters Berita 24 English - Global regulators said on Wednesday that major stablecoins must adhere to the same security standards as...
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| Image: Reuters |
Berita 24 English - Global regulators said on Wednesday that major stablecoins must adhere to the same security standards as conventional means of payment, increasing regulations over the shattered cryptocurrency industry.
In order to minimise the volatility that renders bitcoin and other digital tokens unsuitable for the majority of transactions, stablecoins are cryptocurrencies that are meant to have a stable value compared to conventional currencies, or to a commodity.
A committee at the Bank for International Settlements (BIS), a forum for central banks, and IOSCO, a global organisation for securities regulators, said on Wednesday that they had officially adopted recommendations made available for public comment in October.
According to them, the new guidance represents a significant advancement in the concept of "same risk, same regulation" by indicating when current payment sector regulations should be applied to large stablecoins.
Ashley Alder, chair of IOSCO and CEO of the securities regulator in Hong Kong, stated in a statement, "We expect the same level of resilience and strength in these characteristics in systemically important stablecoin arrangements."
Standards for governance and transparency are covered in the guidance.
According to Jon Cunliffe, chair of the BIS committee and deputy governor of the Bank of England, "recent developments in the cryptoasset market have again increased pressure for authorities to address the potential risks posed by cryptoassets, including stablecoins more generally."
The TerraUSD stablecoin failed earlier this year, and this month, cryptocurrency lender Voyager Digital declared bankruptcy.
The price of Bitcoin, the biggest cryptocurrency, has dropped by over 70% from its record high of $69,000 in November.
When the Financial Stability Board, an international regulatory group that includes IOSCO, adopts "strong" rules for cryptocurrencies more generally in October, global authorities are expected to take further action.
The European Union, which this month enacted a ground-breaking regulation to regulate cryptomarkets, including stablecoins, is ahead of the game while international watchdogs are playing catch-up.
As part of a draught bill on overhauling financial services and markets, Britain is expected to propose regulations for stablecoins this month.
