Senior officials from the Bank for International Settlement (BIS) and regulators worldwide recently convened in Basel to discuss the legal challenges and policy and regulatory issues posed by the emergence of "global stablecoin" initiatives backed by financial institutions and large technology companies. The conference included presentations by Fnality International, the Libra Association and JP Morgan.
The primary topics of discussion regarding the regulatory and public policy issues posed by global stablecoins such as Libra were:
Anti-money laundering / countering the financing of terrorism
Data privacy and protection
Fair competition
Tax compliance
Conduct and market integrity
Agustín Carstens, General Manager of BIS said:
A key part of assessing new initiatives is to understand the details... When such initiatives cross national borders, it's important for regulators to coordinate and come to a common understanding.
The event was convened by the Group of Seven working group on stablecoins chaired by Benoît Cœuré, Chair of the BIS-hosted Committee on Payments and Market Infrastructures. The group will produce a final report on its work by mid-October. Commenting on the conference, Mr Cœuré said:
As a new technology, stablecoins are largely untested, especially on the scale required to run a global payment system... They give rise to a number of serious risks related to public policy priorities. The bar for regulatory approval will be high.
After recently publishing a working paper on building regulation into blockchain finance, this conference demonstrates that the BIS and regulators all over the world recognise that the disruptive potential of blockchain and new blockchain-based payment methods cannot be ignored.