FSB Report Says Stablecoins Promote Financial Inclusion: Urges Regulators to Tighten Laundering Controls | Regulation Bitcoin News

Bitcoin.com

The Financial Stability Board (FSB) says stablecoins have the potential to enhance the efficiency of the provision of financial services. The body adds that the hybrid cryptocurrencies have the potential to bring efficiencies to payments (including cross-border payments) as well as to promote financial inclusion. Yet despite this acknowledgment, the FSB still argues against the widespread adoption of stablecoins claiming they “may generate risks to financial stability, particularly if they are adopted at a significant scale.”

The AML/CFT Argument

In a report, the FSB says activities associated with global stablecoins arrangements (GSA) “pose risks that can span across banking, payments, and securities/investment regulatory regimes both within jurisdictions and across borders.”Predictably, the report states that “depending on the facts and circumstances, specific money-laundering/terrorist financing risks may emerge” with the widespread use of stablecoins.

How To Get Free Crypto  

Interestingly, however, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) reports that “identified cases of laundering through cryptocurrencies remain relatively small compared to cash laundered through traditional methods.” For instance, data from the UN’s Office on Drugs and Crime estimates that between $800 billion to $2 trillion, or the equivalent of between 2% to 5% of global GDP, is laundered through cash channels each year.

Meanwhile, the report lists other risks associated with stablecoins and these include the decentralised nature of stablecoin arrangements. According to the FSB report, such arrangements pose “governance challenges.” Furthermore, the infrastructure and technology used “for recording transactions, and accessing, transferring and exchanging coins could pose operational and cyber-security risks.”

Stablecoin Supply Insignificant

However, despite the increasing regulator concern, the supply of stablecoins remains relatively low. According to data from Coinmetrics, the total supply of stablecoins was expected to exceed the $20 billion mark in October 2020 while the market capitalization of bitcoin stood at $211 billion on October 17.

Still, based on the identified risks and challenges, the FSB is proceeding to recommend that GSAs must to “adhere to all applicable regulatory standards and address risks to financial stability before commencing operation.”

Coinbase Banner  

The report also recommends that authorities must “ensure that GSC arrangements have effective risk management frameworks in place especially with regard to reserve management, operational resilience, cybersecurity safeguards, and AML/CFT measures, as well as ‘fit and proper’ requirements.”

A Coordinated Global Regulatory Response

The FSB report, which is coming after the release of the cryptocurrency enforcement framework document by the US government, has a total of ten recommendations. In 2019, financial regulators were alarmed when Facebook and partners announced plans to launch the Libra stablecoin. Although the Libra project appears to be faltering, countries and regulatory bodies have been working to establish a framework that will provide them with tools to control the stablecoin market.

What are your thoughts on the FSB report? Share your views in the comments section below.

Tags in this story
AML, CFT, Cross Border Payment, financial inclusion, financial stability, financial stability board, Global Stablecoin Arrangements, Laundering, Libra, Market Capitalization, Money Laundering, Society for Worldwide Interbank Financial Telecommunication (SWIFT), Stablecoin Supply, Stablecoins

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Read disclaimer

Go to Source
Author: Terence Zimwara


Recommended Crypto Services, Products and Strategies:

The first thing any crypto investor needs is is a reliable and secure Crypto Wallet.  Whether you’re looking for an online wallet, hardware wallet, desktop or mobile wallet, Crypto Renegade provides you with all the Best Crypto Wallets in each category.

FreeBitcoin Banner  

Best Crypto Wallets Banner

When you’re ready to buy more crypto, or exchange your coins for others, Crypto Renegade’s list of the Best Crypto Exchanges has you covered.  The Crypto Exchanges recommended here offer everything from simplicity and convenience to advanced trading platforms and profit sharing. 

Best Crypto Exchanges Banner

If you want to learn more about the methods and tools that can be used to find Great Crypto Projects, then be sure to check out Crypto Renegade’s strategy for How To Find The Best Cryptocurrency.

Crypto Strategy Banner

For those people that don’t have any money to invest right now, or just want to understand the technology a bit more, you’ll definitely want to check out Crypto Renegade’s Free Crypto Strategy and start collecting Free Coins today!

Free Crypto Banner

What do you think about cryptocurrency? Do you have any questions about it? Be sure to leave a comment below.

This site uses Akismet to reduce spam. Learn how your comment data is processed.