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This is the ‘Final Guide’ to the ‘Stablecoin Agreement’ by BIS and IOSCO

The Bank for International Settlements (BIS) wants to create a set of standards for the stablecoin industry that will cover payments, remittances and settlements.

In a report released today and shared with, the BIS Market Infrastructure and Payments Committee and the International Organization of Securities Commissions (IOSCO) outlined the “direction” their “final guide” on “stablecoin agreements”.

IOSCO is the body that creates global standards for securities markets in 115 jurisdictions.

The institutions also stated, in a press release that “recent developments in the crypto market” have “once again brought urgency to the authorities to address potential risks. hidden by cryptocurrencies, including stablecoins more broadly.”

The agencies claim that what they call a “systemically important” stablecoin agreement will need to ensure that it has “appropriate governance arrangements”.

Token issuers also need to ensure they have an ownership and operating structure that “allows for a clear, direct division of responsibility and accountability,” the agencies wrote.

The report’s authors also stress the need for transparency in this regard and a governance structure that “allows for human intervention when needed”.

The authors emphasize the importance of risk management, stating that stablecoin operators should “regularly review” all “material risks” inherent to dealing with system stakeholders. their ecology. These may include “critical financial market infrastructure”, as well as “payment banks, liquidity providers, validator node operators and other node operators or service providers”. service.”

The elements of “settlement” are also important, the authors add, as stablecoin miners need to “provide a clear and certain final settlement, at least at the end of the value day, regardless of the value of the day, regardless of the value of the settlement.” regardless of the active payment method used” – preferably in “real time.”

Furthermore, the authors explain that token miners need to “clearly define the point at which the transfer of a stablecoin” through a mode of operation “becomes irrevocable and unconditional.” – and ensure that the “clear legal basis” can “acknowledge” and “support” the finality of the assignment.

In terms of settlement, the report’s authors wrote that token miners need to ensure that they have “little or no credit or liquidity risk”.

In addition, they need to make it clear to users what their statutory rights are when it comes to offering token holders a “direct legal claim against the issuer” or ” interest in the underlying reserve asset” for “timely conversion” into “another liquid asset, such as required by a central bank.”

To minimize “credit and liquidity risks” in payments as an “acceptable alternative to the use of central bank money”, the BIS and IOSCO emphasized the need to “ clarity and practicability” of possible legal claims. The same should apply in the case of claims involving reserve asset management companies, as well as “third-party guarantees,” the authors continue.

Regulators should also clarify the “degree” to which their reserve assets can be liquidated “at or near” to the average market price.

The bank and its partners also state that funds backing a stablecoin should be convertible under “both normal and stressful circumstances” and note:

“Credibility, capitalization, liquidity access, and operational reliability of stablecoin issuers, payment account providers, and reserve custodians.”

The authors conclude that governments need to ensure that new regulations on the stablecoin front apply not only to token issuers, but also to “reserve regulators and custodians.” of the assets that support the token.