The industry association argues that a global taxonomy would help promote regulatory cohesion and efficiency across different jurisdictions
With multiple new stablecoins and other crypto assets emerging in the market, the World Federation of Exchanges (WFE) is calling for the creation of a common taxonomy for enhanced regulatory efficiency.
The industry association made the request to the Financial Stability Board, alongside other international standard-setting bodies, to work on the creation, integration and usage of a global taxonomy. This will help drive a common understanding on how global stablecoins (GSC) or crypto assets are sorted into their own specific classification.
The WFE claims that this would help bridge the gap between different jurisdictions and reduce regulatory dissonance.
In addition, the WFE believes that a periodic review of the taxonomy ensures that GSCs and crypto-assets that have matured and may need to be reclassified can be incorporated and regulated more efficiently.
The WFE is calling for the research and development of three specific areas: the generation of classifications through a taxonomy for all GSCs and crypto assets, the application of these recommendations to all crypto assets, and the application of cross border cooperation recommendations and information sharing requirements for all those who engage in trading GSCs or crypto assets.
The WFE has expressed concerns that the lack of a formalised and coordinated approach to enforcement and oversight as a whole may contribute to issues regarding market integrity and consumer protection.
The Chief Executive Officer of the WFE, Nandini Sukumar, emphasises the organisation’s support of better regulations surrounding cryptocurrencies.
“We support the overall ambition of seeking to address fragmented regulatory approaches by moving to an outcomes focus, applying the ‘same business, same risk, same rules’ principle; and building on the need for cross-border co-operation in the supervision of global stablecoin, both for wholesale and retail.”
There are several industry projects that have already started working on a framework. Last year, the Enterprise Ethereum Alliance (EEA) published the Token Taxonomy Initiative (TTI) — a framework that allows enterprises to build blockchain-neutral tokens using comprehensive definitions and terms.
Aside from providing the standards and definitions of tokens, it also includes token specifications or “recipes” that can be used in businesses. These recipes have been based on real use cases, such as Microsoft’s Azure Blockchain Tokens and the tokenization of digital assets’ smart contracts.
High profile participants of the TTI include Accenture, ConsenSys, EY, IBM, Intel, JP Morgan, Komgo and Microsoft.