CPMI, IOSCO issue guidance for systemically important stablecoin arrangements

At the direction of the Financial Stability Board, the Committee on Payments and Market Infrastructures and the International Organization of Securities Commissions have issued guidance regarding the application of existing principles for financial market infrastructures to stablecoin arrangements that are considered systemically important financial structures. The guidance is intended to provide more clarity to systemically important stablecoin arrangements, or SAs, and relevant authorities, but is not intended to create new standards, FSB said.
The guidance offers several considerations for determining the systemic importance of an SA, including the size of the SA, the nature and risk profile of the SA’s activity, the interconnectedness and interdependencies of the SA and the substitutability of the SA—the extent to which there are available alternatives to using the SA as a means of payment or settlement for time-critical services.
Regarding the application of the principles for financial market infrastructures, the guidance noted that “a systemically important SA should develop appropriate risk-management frameworks and tools to address these risks. In particular, it should identify and implement appropriate mitigations, taking an integrated and comprehensive view of its risks.” The guidance also addressed governance, settlement finality and money settlements.