Securities rule applies to Stablecoin including Facebook’s Libra: Global securities watchdog

Stablecoin including Facebook-initiated Libra could come under securities market principles and standards. The conclusion of applying securities rule to stablecoin was decided in a meeting on 30th October in Madrid by the Board of the International Organization of Securities Commissions (IOSCO).

In a statement published on Nov 4, the IOSCO board said that Stablecoin can potentially offer benefits to the participants. However, given the risks involved like consumer protection, financial crime, etc, each stablecoin project needs to be assessed case-by-case to establish which regulation may apply to them.

Ashley Alder, Chair of the IOSCO Board, said: “It is important that those seeking to launch stablecoins, particularly proposals with potential global scale, engage openly and constructively with all relevant regulatory bodies where they may be seeking to operate”.

A coordinated response:

The statement from IOSCO seems to be a coordinated response to last month’s G7 member’s conclusion on stablecoins. As per the report, the group finds stablecoin could solve challenges in traditional global payment arrangements. However, finds stable coins are not completely free from risks and challenges.

Therefore, the G7 believes that no stablecoin project should begin operation until they abide by the same regulatory and security standards of traditional payment and settlement systems.

Much of the regulatory clarity on stablecoin comes in the wake of the increasing popularity of stablecoins. Today there are in existence over 60+ stablecoins with fiat collateral and many more in the development phase. Since the announcement of Facebook’s Libra stablecoin project, policymakers around the world raised their concerns over the project believing that it could risk the financial stability and consumers’ privacy. Hence leading to establishing guidelines for global stablecoin projects.

About International Organization of Securities Commissions (IOSCO):

IOSCO is the leading international policy forum for securities regulators and a global standard-setter for securities regulation. The organization members regulate more than 95% of the world’s securities markets in more than 115 jurisdictions.

It is made up of 34 securities regulators including the Hong Kong Securities and Futures Commission, the U.S. Commodity Futures Trading Commission and U.S. Securities and Exchange Commission).