The World Federation of Exchanges (“WFE”), the UK based organization which serves as a representative for collective global industry group made of exchanges and CCPs called for a response to the growth of stable coins in the market by developing a common taxonomy that would cover crypto-assets more broadly in its latest announcement.
The organization hopes that such a move would help in creating consistent and common regulatory classifications before they fragment further instead of trying to fix differences after fragmentation. The firm primarily addressed its request to the Financial Stability Board and other international standard-setting organisations to generate, adapt and use a global taxonomy as it wishes to drive a common understanding to see if a global stable coin (GSC) or crypto-asset can fit into a certain classification or definition. WFE claims this move would help in reducing the differences between jurisdictions and create a harmonious regulatory environment. Further, periodic review of said taxonomy will help in ensuring stable coins and crypto-assets which have matured to constitute a new, viable, and commonly used product.
The WFE requested FSB to focus on these three areas in particular:
- Creating classifications via a taxonomy for all GSC and crypto-assets
- Application of the recommendations to all crypto-assets
- Applying the cross-border co-operation recommendations and information-sharing requirements to the supervision of all those trading GSC/crypto-assets
WFE further added that regulators need to work with each other in a co-operative manner and share information on global stable coins and crypto assets and also on issuers of these assets and platforms in which these assets are traded. It claims that issues pertaining to market integrity and consumer protection cannot be truly fully addressed unless regulatory bodies enter into a formalized co-ordinated approach to enforcement and oversight in general.
Speaking about their move, Nandini Sukumar – CEO of WFE said: “We support the overall ambition of seeking to address fragmented regulatory approaches by moving to an outcomes focus, applying the ‘same business, same risk, same rules’ principle; and building on the need for cross-border co-operation in the supervision of global stable coin, both for wholesale and retail”.
