International Standards Body set to promote consumer confidence in a rocky stablecoin market
Stablecoins are cryptocurrencies pegged to global currencies or commodities and have become an integral part of the crypto ecosystem. In May last year, the Securities and Exchange Commission announced its new focus on investigating securities law violations in relation to stablecoins. Most recently, its crackdown on the third largest stablecoin BUSD ($16.15 billion market cap), signposted the importance of diversification in a global stablecoin market cap where 99% of cryptocurrencies are currently backed by the US dollar.
In response to the increased interventions, a community of 15 stablecoin companies have united to form Stablecoin Standard. The International Standards Body is set to launch in the coming weeks and currently consists of cryptocurrencies pegged to 20 distinct currencies including the euro (EUR), Singapore dollar (SGD), Australian dollar (AUD), Turkish lira (TRY), Chilean peso (CLP), Great British pound (GBP), and Chinese yuan (CNY).
The community seeks to create a set of standards that promote consumer confidence and showcase the various cases for non-US dollar stablecoins. It will also accredit other issuers and their stablecoins with a ‘Quality Badge’ that will indicate that the projects are conforming to minimum industry standards.
In this way, when international standard setters such as the Financial Stability Board and Securities and Exchange Commission continue to release guidance to strengthen governance, existing stablecoins are more likely to meet the requirements.
This article was written with the assistance of Sogand Shamsaria, Law Graduate.
We encourage you to read the Australian chapter of the Lexology Getting The Deal Through Fintech 2023 publication, which is also written by Partner John Bassilios, our Fintech and Blockchain Lead (and Blockchain Australia Director).
You might be also interested in...
Blockchain, Cryptocurrency, Initial Coin Offerings & Security Token Offerings | 10 Feb 2023
The UK’s HM Treasury has recently published a consultation paper revealing its plans for regulating crypto-assets in the UK. In this update, we outline the HM Treasury’s approach.
Blockchain, Cryptocurrency, Initial Coin Offerings & Security Token Offerings | 6 Feb 2023
Treasury’s new consultation paper on token mapping sets out its proposed approach for how the existing ‘financial product’ regulatory framework may be used to regulate the crypto ecosystem.