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Stablecoins, including Facebook-led Libra, could come under securities rules, says global watchdog

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The International Organization of Securities Commissions (IOSCO), a global securities watchdog, has said that stablecoin proposals and initiatives, such as the Facebook-led Libra project, could come under some existing securities market regulations.

In a statement published Monday, Spain-headquartered IOSCO said that given the potential benefits and risks of stablecoins, a case-by-case approach is needed to establish which specific securities rules would apply.

But, in general, stablecoins "can include features that are typical of regulated securities,” said Ashley Alder, Chair of the IOSCO board. It means that IOSCO rules may apply to stablecoins “depending on how they are structured, including those related to disclosure, registration, reporting and liability for sponsors and distributors.”

IOSCO’s members include 34 securities regulators, including the U.S. Commodity Futures Trading Commission (CFTC) and the U.S. Securities and Exchange Commission (SEC). All these members collectively regulate more than 95% of the world's securities markets in over 115 jurisdictions.

“It is important that those seeking to launch stablecoins, particularly proposals with potential global scale, engage openly and constructively with all relevant regulatory bodies where they may be seeking to operate,” said Alder, who is also the CEO of the Securities and Futures Commission of Hong Kong.

As global stablecoin initiatives are subject to “significant” international and public scrutiny, Alder said that international collaboration is needed, so "the risks relating to stablecoins can be identified and mitigated, and the potential benefits realized."

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Oct 15, 2021, 2:54AM UTC
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