At the Davos meeting, IMF Deputy Managing Director Bo Li discussed stablecoin classification issues and the significance of harmonizing standards at an international level.
Issues in Stablecoin Classification
During his speech at the World Economic Forum, Bo Li emphasized that various regions, including the US, Europe, and Asia, are actively working on stablecoin regulation. However, he noted the uncertainty regarding whether stablecoins should be classified as currency or financial assets. "Currently, numerous regulatory experiments with digital currencies and stablecoins are being conducted worldwide," he stated.
M0 and M2 Classification
Li explained that depending on which category stablecoins fall into, the regulations will vary. If stablecoins are considered M0, they will need to be regulated as digital cash equivalents, which would require stringent rules regarding their issuance and liquidity. Conversely, if they are classified as M2, they will be viewed like bank deposits, requiring a different regulatory framework.
Global Regulatory Initiatives for Stablecoins
Recently, the US passed the Genius Act, providing clearer regulation for USD-backed stablecoins, while Hong Kong implemented regulations for stablecoins that will take effect on August 1. According to Li, this highlights changes in the global economic landscape, with countries like Russia and South Korea also feeling pressure to enhance their regulatory frameworks.
Overall, the successful implementation and regulation of stablecoins will depend on consensus among countries regarding their classification and the establishment of appropriate regulatory norms.
