Stablecoins would have to comply with the same safeguards as their more traditional competitors in payments, regulators said yesterday, as authorities get to grips with a rapidly evolving sector.
Stablecoins are cryptocurrencies designed to have a stable value relative to traditional currencies, or to a commodity such as gold, to avoid the volatility that makes bitcoin and other digital tokens impractical for most commerce.
Facebook Inc’s move in 2019 to introduce its own stablecoin — diem, then known as libra — raised concerns among governments and central banks that a major payments competitor could emerge overnight with little regulation.
Since then, diem has radically scaled back its ambitions and plans to launch a US dollar stablecoin.
The IOSCO group of securities regulators and the Bank for International Settlements (BIS), a global forum for central banks, set out yesterday how current rules for major clearing, settlement and payments services should also be applied to “systemic” or heavily used stablecoins.
The proposals, put out to public consultation before being finalized early next year, put into practice what regulators have long called for: the same rules for the same type of business and accompanying risks.
The rules mean a stablecoin operator must set up a legal entity that spells out how it is governed and manages operational risks like cyberattacks.
Although still little-used for commerce, the use of stablecoins in crypto trading has grown rapidly as retail and larger investors warmed to the emerging asset class during the COVID-19 pandemic.
Tether, the largest stablecoin, has a market capitalization of about US$68 billion versus just US$15 billion a year ago.
The value of circulating USD coin, another major stablecoin, has also jumped dramatically to more than US$30 billion from just US$2.7 billion a year ago, CoinMarketCap data showed.
Countries that allow stablecoins to operate would be required to apply the principles as part of their affiliation to IOSCO and the BIS.
“This report marks significant progress in understanding the implications of stablecoin arrangements for the financial system and providing clear and practical guidance on the standards they need to meet to maintain its integrity,” IOSCO chair Ashley Alder said in a statement.
The proposals do not cover issues specific to stablecoins pegged to a basket of fiat currencies, which would be considered separately.
In Italy’s storied gold-making hubs, jewelers are reworking their designs to trim gold content as they race to blunt the effect of record prices and appeal to shoppers watching their budgets. Gold prices hit a record high on Thursday, surging near US$5,600 an ounce, more than double a year ago as geopolitical concerns and jitters over trade pushed investors toward the safe-haven asset. The rally is putting undue pressure on small artisans as they face mounting demands from customers, including international brands, to produce cheaper items, from signature pieces to wedding rings, according to interviews with four independent jewelers in Italy’s main
Macronix International Co (旺宏), the world’s biggest NOR flash memory supplier, yesterday said it would spend NT$22 billion (US$699.1 million) on capacity expansion this year to increase its production of mid-to-low-density memory chips as the world’s major memorychip suppliers are phasing out the market. The company said its planned capital expenditures are about 11 times higher than the NT$1.8 billion it spent on new facilities and equipment last year. A majority of this year’s outlay would be allocated to step up capacity of multi-level cell (MLC) NAND flash memory chips, which are used in embedded multimedia cards (eMMC), a managed
Japanese Prime Minister Sanae Takaichi has talked up the benefits of a weaker yen in a campaign speech, adopting a tone at odds with her finance ministry, which has refused to rule out any options to counter excessive foreign exchange volatility. Takaichi later softened her stance, saying she did not have a preference for the yen’s direction. “People say the weak yen is bad right now, but for export industries, it’s a major opportunity,” Takaichi said on Saturday at a rally for Liberal Democratic Party candidate Daishiro Yamagiwa in Kanagawa Prefecture ahead of a snap election on Sunday. “Whether it’s selling food or
In the wake of strong global demand for AI applications, Taiwan’s export-oriented economy accelerated with the composite index of economic indicators flashing the first “red” light in December for one year, indicating the economy is in booming mode, the National Development Council (NDC) said yesterday. Moreover, the index of leading indicators, which gauges the potential state of the economy over the next six months, also moved higher in December amid growing optimism over the outlook, the NDC said. In December, the index of economic indicators rose one point from a month earlier to 38, at the lower end of the “red” light.
RSS