Leading international policy forum for securities regulators and a global standard setter for securities regulation, the International Organization of Securities Commissions (IOSCO), met last week and concluded that some stablecoins can fall under securities market regulations as they may display features that are typical of regulated securities, meaning that IOSCO rules could apply to different stablecoins depending on their specific structures.
The board of the International Organization of Securities Commissions (IOSCO), made up of 34 securities regulators including the U.S. SEC and the U.S. CFTC, released a statement on Nov. 4 sharing the details of their Oct. 30th meeting in Madrid. The meeting was set to discuss the potential risks and benefits that come with stablecoins, and how securities market regulation may apply to certain stablecoin initiatives that have global reach potential, among other topics.
The IOSCO FinTech Network, established in May 2018 to facilitate exchanges among members regarding Fintech developments and Chaired by the UK Financial Conduct Authority (FCA), finally settled on a case-by-case approach. More extensively, a detailed understanding of each stablecoin and their functions is required, as well as the rights and obligations of both participants and sponsors regarding the stablecoin.
According to Ashley Alder, Chair of the IOSCO Board, stablecoins “can include features that are typical of regulated securities,” meaning that IOSCO Principles and Standards may be applied depending on how stablecoins are structured. Alder also referred to the G20 press release on global stablecoins published last month, specifically to the forum’s take on the potential public policy and regulatory risks that global stablecoins with potential systemic footprints may arise, encouraging international collaboration to address those issues before stablecoins begin to operate: “It is important that those seeking to launch stablecoins...engage openly and constructively with all relevant regulatory bodies where they may be seeking to operate.”
Alder also referred to the G7 report on “Investigating the impact of global stablecoins,” stating that the commission would work with the standard setting Financial Stability Board (FSB) and other standard setting bodies in the follow-up work from the report.