According to the FSB’s investigation, most stablecoins do not follow the criteria and must enhance their governance, risk management, redemption rights, stability procedures, and disclosures.
The crypto meltdown sparked by the collapse of the Terra stablecoin and the temporary de-pegging of the largest stablecoin, Tether, has influenced some new suggestions.
Currently, cryptocurrency exchanges are the major wallet providers, and FBS has seen that some of the exchanges are affiliated with certain stablecoins like Coinbase with USDC, and Binance with BUSD. However, the issuing is distinct from the exchanges. Circle issues USDC, whereas Paxos issues BUSD.
The FSB is worried that wallet providers may be involved in stablecoin issuance as well as off-chain transactions without adequate controls.
Another point of issue is governance. The FSB is looking for recognizable legal companies or persons to be in charge of the global stablecoin’s functioning. This would make decentralized stablecoins difficult to implement.
If numerous entities are participating, or the stablecoin straddles jurisdiction, the governance must specify each entity’s obligations.
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