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Stablecoins Obligatory License What Does It Entail?

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The Financial Stability Board (FSB) is proposing a new set of guidelines that will affect the issuance and operation of stablecoins.

The key decision is a demand for every stablecoin issuer to obtain a local license before they operate in a specific jurisdiction.

READ ALSO: Selling Raw Foods in Nigeria, Everything You Must Know

FSB New Guidelines Might Change The Crypto Landscape

fsb

Source: Twitter

The FSB is an international body comprising top representatives from the 20 largest economies in the world (G-20).

On July 17, the body suggested a global regulatory framework for cryptocurrencies with two major suggestions.

One of them is a high-level crypto regulation recommendation similar to the tightening regulatory landscape in the United States.

The board proposed to rely on the principle of the same activity, same risk, and regulation. The FSB defines a global stablecoin (GSC) as a coin that serves as a means of payment and storing value. Also, it has the potential for adoption in several jurisdictions.

They also suggested that the local authorities demand a governance framework from GSC providers. This framework includes a governance body comprising one or more reputable legal entities or individuals.

It implies that fully permissionless ledgers will challenge accountability and governance. They proposed that authorities should also control the permissionless ledgers.

The FSB also emphasized the importance of compliance with the Travel Rule and the Anti-Money Laundering/Combating Terrorist Financing (AML/CFT) requirements.

The Travel Rule, created in 2019, is a measure to combat illegal cryptocurrency transactions. The rule mandates virtual asset providers to obtain and disclose precise details of the sender and recipient of a crypto transfer.

How Does It Affect The Crypto Market?

The new proposals will likely create mixed reactions in the crypto sphere since revealing the details of crypto transactions takes away anonymity and decentralization.

 

 

 

 

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