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The Financial Stability Board said that even if a stablecoin is properly designed and well-regulated, “it may not necessarily have a positive impact on cross-border payments as the drawbacks could outweigh any potential benefits.”
Details: In a new report, the FSB said that stablecoins present challenges related to competition, consumer and investor protection, market integrity, data privacy, money laundering and terrorist financing, and financial stability risks for emerging market and developing economies.
Emerging Market Risks: The report follows an FSB letter to G20 finance ministers this week ahead of meetings in Brazil that said the use of foreign currency-pegged stablecoins may exacerbate challenges for monetary policy and capital flow management in emerging and developing countries.
ICBA View: ICBA shares the FSB’s concerns about stablecoins disrupting financial stability and has significant concerns about the use of stablecoins for illicit activities. ICBA supports global efforts to advance international cryptoasset regulation, including the FSB’s framework to support consistent regulatory and supervisory standards and baseline policy recommendations from the International Organization of Securities Commissions.
Action: As Congress debates a regulatory framework for stablecoins, ICBA President and CEO Rebeca Romero Rainey wrote in a LinkedIn post this week that ICBA is engaged with lawmakers to ensure strong oversight over stablecoin issuers.