A consistent regulatory framework, along with its global implementation, is essential to address the risks associated with stablecoins, prevent regulatory arbitrage, and ensure a level playing field in the digital asset ecosystem, according to a report by the Financial Stability Institute (FSI).
The report highlights the importance of regulatory clarity and enforcement to mitigate potential financial stability risks posed by stablecoins. It emphasizes the need for consistent and harmonized regulations across jurisdictions to prevent regulatory arbitrage, where entities take advantage of gaps or inconsistencies in regulations to engage in risky or illegal activities.
By establishing clear rules and guidelines for stablecoins, regulators can promote a safer and more transparent digital asset market. This will help foster investor confidence, protect consumers, and support the growth and development of the digital asset ecosystem.
The FSI report calls for cooperation and coordination among regulators at both the national and international levels to effectively regulate stablecoins and address potential risks. It emphasizes the importance of a collaborative approach to ensure that regulatory frameworks are robust, adaptable, and responsive to the evolving landscape of digital assets.
Overall, a coherent regulatory framework for stablecoins is crucial to maintaining financial stability, preventing regulatory loopholes, and promoting fair competition in the digital asset industry. By working together to establish and enforce consistent regulations, regulators can help create a safer and more sustainable environment for digital asset innovation and growth.
