In recent years the Financial Stability Board (FSB) has released high level recommendations for the regulation of crypto-assets and global stablecoins. It has now conducted a peer review of many nations, finding inconsistent implementation. The FSB was particularly critical of stablecoin frameworks, finding that few of them aligned with its recommendations. Additionally, compared to crypto, fewer jurisdictions have advanced stablecoin legislation.
Fifteen out of 29 jurisdictions have proposed or finalized crypto legislation, whereas only nine regions are at this more advanced stage for stablecoins. Just three jurisdictions have granted stablecoin licenses, although this did not count US state-licensed issuers. These three include the European Union as a single regulatory framework, though it encompasses stablecoin issuers in multiple member countries.
“While stricter frameworks provide for better safeguards at a price of higher compliance cost for firms, more lenient regimes could attract issuers seeking lighter requirements, hence raising the risk of regulatory arbitrage,” the authors wrote. “Divergences in licensing regimes could present challenges to global stablecoin issuers who need to comply with different rules across jurisdictions.”
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