The Case of Stablecoins and Arrangements

Regulating the Crypto Ecosystem: The Case of Stablecoins and Arrangements

Author/Editor:

Parma Bains
;
Arif Ismail
;
Fabiana Melo
;
Nobuyasu Sugimoto
;
Nobuyasu Sugimoto

Publication Date:

September 26, 2022

Electronic Access:

Free Download.

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Summary:

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, and 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. This note provides key elements that should feature in any regulatory arrangement. For effective implementation, domestic and international collaboration are key.