The International Organization of Securities Commissions (IOSCO) and the Committee on Payments and Market Infrastructures (CPMI) published a call for comments on new consultative report which provides guidance on the application of the Principles for financial market infrastructures (PFMI) to stablecoin arrangements (SAs). According to the report, an SA which performs a data function should be considered an FMI for the purpose of applying the PFMI. In addition, if an SA performs transfer functions that is determined by authorities to be systemically important, the SA would be expected to observe all relevant principles of the PFMI. The report also details some notable and novel features of SAs, as compared with other FMIs. For example, both the CPMI and IOSCO consider that the use of stablecoins – settlement assets that are neither central bank nor commercial bank money – make SAs unique (as compared to other FMIs). Both regulators are also of the view that SAs are characterised by some features, including multiple interdependent functions, that may appear more pronounced in SAs than in existing FMIs. In addition, the report highlights that SAs may have new features that may also be adopted by other FMIs including the use of distributed ledger technology protocols along with the decentralisation of operations. The paper also includes guidance on specific principles of the PFMI. Regarding the framework for comprehensive management of risks, the regulators argue that systemically important SAs should regularly review the material risks that the FMI function bears from and poses to other SA functions.

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