The industry association argues that a global taxonomy would help to promote regulatory cohesion and efficiency in different jurisdictions
In view of the numerous new stablecoins and other cryptocurrencies appearing on the market, the World Federation of Exchanges (WFE) is calling for the creation of a common taxonomy to increase regulatory efficiency.
The industry association submitted a request to the Financial Stability Board to work with other international standard-setting bodies to create, integrate and use a global taxonomy. This will lead to a common understanding of how global stablecoins (GSCs) or cryptocurrencies are classified in their own specific classification.
WFE claims that this would help bridge the gap between different jurisdictions and reduce regulatory dissonance.
Furthermore, the WFE believes that a periodic review of the taxonomy ensures that GSCs and cryptocurrencies that have matured and may need to be reclassified can be more efficiently integrated and regulated.
The WFE calls for the research and development of three specific areas: the creation of classifications through a taxonomy for all GSCs and cryptocurrencies, the application of these recommendations to all cryptocurrencies, and the application of cross-border cooperation recommendations and information exchange requirements for all those trading in GSCs or cryptocurrencies.
The WFE expressed concerns that the lack of a formalised and coordinated approach to enforcement and monitoring could contribute to overall market integrity and consumer protection issues.
WFE’s Chief Executive Officer, Nandini Sukumar, emphasizes the organization’s support for better regulation of cryptocurrencies.
„We support the general effort to counteract fragmented regulatory approaches by being result-oriented, applying the ’same business, same risk, same rules‘ principle and building on the need for cross-border cooperation in the supervision of global stablecoin in both wholesale and retail markets.
There are several industrial projects that have already started work on a system. Last year, the Enterprise Ethereum Alliance (EEA) published the Token Taxonomy Initiative (TTI) – a system that allows companies to build blockchain neutral tokens using comprehensive definitions and terms.
In addition to providing the standards and definitions of tokens, it also contains token specifications or „recipes“ that can be used in organizations. These recipes are based on real use cases, such as Microsoft’s Azure blockchain tokens and the tokenization of smart contracts for digital currencies.
Among the top-class participants of the TTI are Accenture, ConsenSys, EY, IBM, Intel, JP Morgan, Komgo and Microsoft.