The International Organization of Securities Commissions (IOSCO) said existing securities rules could be applied to Libra, Facebook’s proposed cryptocurrency, according to a report by Reuters.
The IOSCO is made up of regulators across the globe, including Japan, Europe and the U.S. After an assessment, the group found that stablecoins (digital coins backed by real currency or commodities), have both benefits and potential risks.
“Our analysis has shown that so-called ‘stablecoins’ can include features that are typical of regulated securities,” IOSCO Chair Ashley Alder said in a Nov. 4 statement.
That would mean that regulation already in place for securities, like reporting, disclosures and registration, could be applied to Libra.
When Libra was announced, regulators and lawmakers across the globe expressed skepticism over its use and the possibility that it could not only disrupt the global financial system, but be used for malicious purposes like crime or money laundering.
Some countries, like France and Germany, have said outright that they will not use Libra. Facebook said it plans to release the cryptocurrency in 2020.
The CEO of Facebook, Mark Zuckerberg, has said Libra was a “risky project,” but that it could potentially lower the cost of digital payments and help more of the world’s unbanked population have access to the financial system.
“It is important that those seeking to launch stablecoins, particularly proposals with potential global scale, engage openly and constructively with all relevant regulatory bodies where they may be seeking to operate,” Alder said.
Alder called for clear explanations of not only the rights of stablecoin users but also the responsibilities as well.
“We therefore encourage international collaboration, so the risks relating to stablecoins can be identified and mitigated, and the potential benefits realized,” said Alder.
The IOSCO said it will assist in the global Financial Stability Board’s work on stablecoins for the G20 Group of 20 Economies.