In October 2020, the FSB issued a report with a set of 10 high-level recommendations on the regulation, supervision and oversight of so-called “global stablecoin” (GSC) arrangements (“High-level Recommendations”).

In 2022 the FSB, in consultation with relevant international standard-setting bodies (SSBs) and international organisations, reviewed its High-level Recommendations, including how any gaps identified could be addressed by existing frameworks, considering recent market and policy developments.

This report describes the findings from this review, covering:

  • Recent market developments and the characteristics of existing stablecoins;
  • Recent policy developments, including regulatory initiatives and recent work of the SSBs; and
  • Proposals to revise the High-level Recommendations.

The high-level Recommendations seek to promote consistent and effective regulation, supervision and oversight of GSCs across jurisdictions to address the potential financial stability risks posed by GSCs, both at the domestic and international level, while supporting responsible innovation and providing sufficient flexibility for jurisdictions to implement domestic approaches.

The FSB is soliciting comments from the public on its proposals. A set of questions for this purpose are included in its proposed framework. The FSB encourages all interested stakeholders to participate in the consultation. Responses should be sent to [email protected] by Thursday 15 December 2022. Responses will be published on the FSB’s website unless respondents expressly request otherwise.

The FSB aims to finalise the updated high-level recommendations by July 2023 reflecting comments received through public consultation.

Revised FSB High-level Recommendations

Red text highlights substantive revisions from 2020 High-level Recommendations.

FSB High-level recommendation 1

 

 Authorities should have and utilise the necessary or appropriate powers and tools, and adequate resources, to comprehensively regulate, supervise, and oversee a GSC arrangement and its associated functions and activities, and enforce relevant laws and regulations effectively. 
FSB High-level recommendation 2 Authorities should apply comprehensive regulatory, supervisory and oversight requirements consistent with international standards to GSC arrangements on a functional basis and proportionate to their risks insofar as such requirements are consistent with their respective mandates.
FSB High-level recommendation 3 Authorities should cooperate and coordinate with each other, both domestically and internationally, to foster efficient and effective communication, information sharing and consultation in order to support each other in fulfilling their respective mandates and to ensure comprehensive regulation, supervision, and oversight of a GSC arrangement across borders and sectors.
FSB High-level recommendation 4 Authorities should require that GSC arrangements have in place a comprehensive governance framework with clear and direct lines of responsibility and accountability for all functions and activities within the GSC arrangement.
FSB High-level recommendation 5 Authorities should require that GSC arrangements have effective risk management frameworks in place especially with regard to operational resilience, cyber security safeguards and AML/CFT measures, as well as “fit and proper” requirements, if applicable, and consistent with jurisdictions’ laws and regulations.
FSB High-level recommendation 6 Authorities should require that GSC arrangements have in place robust systems and processes for collecting, storing and safeguarding data.
FSB High-level recommendation 7 Authorities should require that GSC arrangements have appropriate recovery and resolution plans.
FSB High-level recommendation 8 Authorities should require that GSC issuers provide all users and relevant stakeholders with comprehensive and transparent information to understand the functioning of the GSC arrangement, including with respect to governance framework, redemption rights and its stabilisation mechanism.
FSB High-level recommendation 9 Authorities should require that GSC arrangements provide a robust legal claim to all users against the issuer and/or underlying reserve assets and guarantee timely redemption. For GSCs referenced to a single fiat currency, redemption should be at par into fiat. To maintain a stable value at all times and mitigate the risks of runs, authorities should require GSC arrangements to have an effective stabilisation mechanism, clear redemption rights and meet prudential requirements.
FSB High-level recommendation 10 Authorities should require that GSC arrangements meet all applicable regulatory, supervisory and oversight requirements of a particular jurisdiction before commencing any operations in that jurisdiction and adapt to new regulatory requirements as necessary and as appropriate.