Global regulators call for stricter rules for stablecoins

There has been apprehension in the crypto market regarding stablecoins in the past few months. Global regulators say that stablecoins should follow the same rules as normal means of payment. IOSCO, the global body of securities regulators, and the Bank for International Settlements (BIS), an affiliate of central banks, have said that they have accepted the proposals in this regard.

As reported by Reuters, these proposals state that the existing rules for the payments sector should apply for large stablecoins. This would be a major step towards equal risk, equal regulation for stablecoins. “We expect stablecoins to have the same level of strength,” said Ashley Alder, head of IOSCO and CEO of Hong Kong-based securities regulator. The proposals include measures to control risk, standards for governance and transparency. Jon Cunliffe, head of the BIS committee and deputy governor of the Bank of England, said: “Recent events in the crypto market have increased the need to address the risks posed by crypto assets, including stablecoins.”

Stablecoins are cryptocurrencies that attempt to link their market price to a reserve asset such as gold or common currencies. These are more commonly used for digital transactions that involve converting virtual assets into real assets. USD Coin, Tether and Binance USD are some of the popular stablecoins, which are pegged to the US dollar. Stablecoin, a rapidly growing version of crypto, has emerged as a major medium of exchange. It is often used by traders to remit funds.

It is easy to exchange major stablecoins for bitcoin or other cryptocurrencies. Investors were hit hard by the recent fall in stablecoins. The UK Finance Ministry has decided to put in place a plan to deal with the downside in large stablecoins such as TerraUSD. It said in a consultation paper, “Volatility in the crypto market has increased the need to regulate specific types of stablecoins to protect users and maintain financial stability. Also, protecting the interests of users can have a big impact.”

(This news has not been edited by NDTV team. It has been published directly from Syndicate feed.)

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