On 4 November 2019, the International Organization of Securities Commissions (IOSCO) released a statement on a study of stablecoin initiatives with a potential global reach (Global Stablecoins).

IOSCO’s FinTech Network (the Network), which is chaired by the FCA and was established in May 2018 to facilitate exchanges among IOSCO members on their experiences relating to FinTech developments, conducted the study.

The Network conducted an assessment for the IOSCO Board on how IOSCO principles and standards might apply to Global Stablecoins. This revealed that Global Stablecoins can include features that are typical of regulated securities, meaning that IOSCO principles and standards may apply to Global Stablecoins depending on how they are structured, including those related to disclosure, registration, reporting and liability for sponsors and distributors.

The Network came to the conclusion that a case-by-case approach is necessary to establish which IOSCO principles and standards, and national regulatory regimes, would apply. Therefore, a detailed understanding of how the particular proposed Global Stablecoin is expected to operate is needed, including the rights and obligations it confers on participants and the continuing obligations of the sponsor.

The IOSCO Board considered the study at its Madrid meeting on 30 October 2019. The Board agrees with the recent G20 press release that Global Stablecoins with potential systemic footprints give rise to a set of serious public policy and regulatory risks. In light of this, it urges international collaboration, so that the risks related to Global Stablecoins can be identified and mitigated, and the potential benefits realised.

IOSCO will participate fully in the Financial Stability Board’s follow-up work on Global Stablecoins, working closely with other standard setting bodies to guarantee a coordinated response. It also encourages those seeking to launch Global Stablecoins to engage openly and constructively with all relevant regulatory bodies, in jurisdictions they may be seeking to operate.