IIF Authors

Status: Will be live at 12/16/2022 13:45

IIF FSB Comment Letter on GSCs and Crypto-Assets

The Institute of International Finance has responded to the Financial Stability Board’s consultative reports on global stablecoins (GSCs) and crypto-assets (CAs) in a comment letter dated December 15, 2022.

In its comment letter, the IIF advocates for a measured approach that does not unduly restrict the ability of regulated financial institutions to prudently engage in CA activities, such that associated risks will be subject to robust sound risk management, capital and liquidity regulation, and ongoing supervisory oversight.

The IIF strongly supports technology neutrality in regulation, noting that this may require clarifying guidance or extending existing regulatory scope to address the specificities of a particular technology. We note the need for greater clarity on the definitions and treatment of tokenized deposits, GSCs, and CAs, and urge the FSB to deduplicate and align the regimes for each GSCs and CAs. The principle of “same activity, same risk, same regulation” in this work has been widely recognized; however, we would add the nuances that understanding “same regulation” as meaning “same regulatory outcome” can be more useful.

Other key points made include:

• reference to “potential” GSCs creates considerable uncertainty, and we feel should be removed, without prejudice to the role of supervisors in monitoring developments;

• we largely leave issues regarding DeFi, DAOs and NFTs to further consideration by workstreams currently underway elsewhere; and

• the FSB should clarify that the CA and GSC regimes are not intended to apply to books and records systems using DLT or blockchain infrastructure, including internal Treasury systems covering multiple affiliates within a financial institution group.

The comment letter continues the close engagement of the IIF with the global standard setting bodies around crypto-assets readers. The IIF submitted a response to the first consultation on GSCs in 2020 and convened a round table with the FSB on these topics in August 2022. It also submitted a comment letter jointly with other trade associations on the prudential treatment of crypto-assets exposures to the Basel Committee on Banking Supervision in September 2022.