Application of the Principles for Financial Market Infrastructures to stablecoin arrangements

The Bank for International Settlements' Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) publish their guidance on the application of the Principles for financial market infrastructures (PFMI) to systemically important stablecoin arrangements (SA), including the entities integral to such arrangements.

The guidance highlights that the transfer function of an SA is comparable to the transfer function performed by other types of financial market infrastructure (FMI). As a result, an SA that performs this transfer function is considered an FMI for the purpose of applying the PFMI and, if determined by relevant authorities to be systemically important, the SA as a whole would be expected to observe all relevant principles in the PFMI.

This guidance is a major step forward in applying "same risk, same regulation" to systemically important SA that are used for payments. It is also a key contribution to the G20 cross-border payments programme and supports the work of the Financial Stability Board in this area.