Stablecoins pose risks to the financial system, according to the Financial Stability Board..There are risks surrounding data privacy, illicit finance, cybersecurity, market integrity and investor protections, according to the July 23 report. "The collapse and de-peg of certain stablecoins since the outbreak of the crypto-asset market turmoil in 2022 highlights the potential fragility of stablecoins that are not adequately designed and regulated," according to FSB. .A targeted regulatory and policy response could be required to navigate cross-border risks of foreign currency-pegged stablecoins, according to FSB. Stablecoin risks are seen as especially prevalent in emerging markets and developing economies.."Comprehensive supervisory and regulatory frameworks, consisting at least of implementation of the FSB's cryptoasset and global stablecoin recommendations, along with other relevant international standards, will help address financial stability and financial integrity risks while supporting macroeconomic policies and addressing other risks," according to the board. .The Independent Community Bankers of America also expressed concern over stablecoins disrupting financial stability and the reported use of stablecoins for illegal activities. ICBA President and CEO Rebeca Romero Rainey called for regulators to ban commercial firms from issuing private currency and address crypto's perceived role in enabling financial crimes. .Stablecoin legislation has remained elusive in the United States. A bill introduced in April by Sen. Kirsten Gillibrand (D-N.Y.) and Cynthia Lummis (R-Wyo.) would authorize state trust companies to create and issue payment stablecoins up to $10 billion.
