The GFMA recently provided its response to the Financial Stability Board’s (“FSB”) consultation paper (“the Paper”) titled Addressing The Regulatory, Supervisory And Oversight Challenges Raised By “Global Stablecoin” Arrangements. The GFMA put forward certain recommendations to support the implementation of global stablecoin (“GSC”) arrangements provided for in the Paper. These recommendations include:
The GFMA felt that the existing FSB definition of a stablecoin is too broad, and suggested a new definition which excludes other digital forms of money already covered by existing regulations. It also acknowledged that stablecoin are not only asset-linked or algorithm-based, but can be hybrid. Thus, the FSB should consider how hybrid stablecoins should be regulated.
The GFMA’s other comments included the following:
As the asset management function of a stablecoin arrangement may fall outside existing regulations and create a regulatory gap, regulators should determine who should be held responsible for overall governance of the arrangement and whether this responsibility could shift based on the decentralised nature of the issuer or stability mechanisms. All in all, the GFMA endorsed the FSB’s recommendations and recommended that institutions conducting the same activities using Distributed Ledger Technology be subject to the same regulatory requirements or oversight.
Please see the full GFMA response here.
 “Tokens (crypto-assets) designed to minimise/eliminate price fluctuations relative or in reference to other asset(s), which are not issued by a central bank, FMI, bank, credit institution or highly-regulated depository institution. They may represent a claim on the issuing entity, if any, and/or the underlying assets.”