Application of the Principles for Financial Market Infrastructures to stablecoin arrangements

This CPMI-IOSCO consultative report proposes guidance on the application of the Principles for financial market infrastructures (PFMI) to systemically important stablecoin arrangements (SAs), including the entities integral to such arrangements. This report is not intended to create additional standards for SAs but rather to provide more clarity to systemically important SAs and relevant authorities as those SAs seek to observe the PFMI.

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 report provides considerations to assist relevant authorities in determining whether an SA is systemically important.

SAs may present some notable and novel features as compared with existing FMIs. These notable features relate to: (i) the potential use of settlement assets that are neither central bank money nor commercial bank money and carry additional financial risk; (ii) the interdependencies between multiple SA functions; (iii) the degree of decentralisation of operations and/or governance; and (iv) a potentially large-scale deployment of emerging technologies such as distributed ledger technology. The report proposes guidance on the application of the PFMI with respect to these features of SAs, which should help SAs and relevant authorities in applying the PFMI to systemically important SAs.

The CPMI and IOSCO invite comments on this consultative report generally and the questions set out in the report specifically.