Regulating the Crypto Ecosystem: The Case of Stablecoins and Arrangements

FinTech Notes, September 26, 2022

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Regulating the Crypto Ecosystem: The Case of Stablecoins and Arrangements

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Bibliographic details

• Authors: Parma Bains, Arif Ismail, Fabiana Melo, Nobuyasu Sugimoto
• Published: September 26, 2022
• Series: FinTech Notes
• DOI: https://doi.org/10.5089/9798400221675.063

Executive summary and key findings

• Stablecoins have experienced periods of rapid growth, accelerated links with traditional finance.
• Without proper regulation, contagion risks to wider financial sector will increase.
• Global regulation for stablecoins should be comprehensive, consistent, risk-based, flexible, and focus on their structural features and use.
• Requirements on stablecoins should cover the entire ecosystem and all its key functions.
• There should be additional oversight for systemic stablecoin arrangements.
• In markets where risks are growing quickly, authorities should take immediate action by using all the tools at their disposal.
• For effective implementation, domestic and international collaboration are key.

Policy recommendations and regulatory principles

• Design global regulation that is:
  • Comprehensive
  • Consistent
  • Risk-based
  • Flexible
  • Focused on structural features and use of stablecoins
• Apply requirements across the entire stablecoin ecosystem and all key functions.
• Impose additional oversight and safeguards for systemic stablecoin arrangements.
• Where risks are escalating quickly, authorities should take immediate action using all available tools.
• Prioritize domestic and international collaboration for effective implementation.

Scope and thematic coverage

• Subjects addressed include: Blockchain and DLT, Central Banks, Deposit insurance, Digital currencies, Economic sectors, Financial crises, Reserve assets, Technology, Virtual currencies.
• Keywords listed: Blockchain and DLT, CPMI-IOSCO, crypto Ecosystem, crypto-asset, DeFi, Deposit insurance, Digital currencies, DLT, e-money regulation, Economic sectors, Emerging technologies, Financial crises, Financial sector policy and analysis, Financial sector stability, Financial services, Fintech, FSB, Global, IMF Fintech Note 2022/008, Infrasctructures to Stablecoin arrangement, IOSCO, regulation, Reserve assets, stablecoin, Stablecoin regulation, Systemic risk, Technology, TerraUSD, Tether, Virtual currencies.

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• Regulating the Crypto Ecosystem: The Case of Stablecoins and Arrangements
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