Financial Stability Board To Scrutinize Stablecoins at the G20’s Request

According to Law360, the G20 nations have requested that the Financial Stability Board (“FSB”), an international body that monitors and makes recommendations about the global financial system, assess the role that stablecoins will have on the global financial system now that Facebook’s proposed stablecoin (Libra) has gained international attention and scrutiny.  So-called stablecoins are a type of digital asset that “attempt to address the volatility that has come to be associated with more mainstream cryptocurrencies, like Bitcoin or Ethereum, by tying their value to things like the U.S. dollar or a basket of currencies.”  According to FSB Chair Randal K. Quarles, “[a]lthough there is a small risk to financial stability today, there is no doubt the potential scale of stablecoins and other crypto-assets yet to emerge may pose regulatory challenges.”  Once the FSB has completed its assessment of existing regulations that apply to stablecoins, it will recommend to the G20 any appropriate actions that need to be taken to ensure that financial stability is not negatively affected by the coins’ introduction.