SCS is a newly developed framework that establishes high-level, global Standards for stablecoin issuers. These Standards outline requirements for reserve management, transparency, governance, consumer protection, and financial crime prevention. The aim is to provide a unified approach that encourages responsible innovation while protecting users.es here

The SCS Policy Working Group, supported by external reviewers and experts, drafted these Standards by examining existing and proposed regulations around the world. The goal is broad adoption by stablecoin issuers, regulators, and stakeholders by late 2025.

Because stablecoins can serve as a critical bridge between traditional finance and blockchain-based markets, consistent guidelines help ensure:

• Financial Stability: By requiring full and transparent reserves, stablecoins minimize systemic risk.

• Consumer Protection: Clear disclosures and robust protections promote trust among users.

• Regulatory Clarity: A standardised approach helps regulators and issuers work together more efficiently.ion text goes here

For the time being, the SCS Standards focus on fiat-backed or e-money tokens—those that hold a 1:1 reserve in high-quality liquid assets (HQLA). DeFi-oriented, algorithmic, commodity-backed, multi-currency, or more complex stablecoin models are currently out of scope.

Under SCS, a stablecoin is defined as:

• A fiat-backed or e-money token (issued on a blockchain),

• Prudentially regulated or overseen by an equivalent authority,

• Backed by 1:1 reserves in HQLA,

With reserve valuations updated daily to ensure they cover at least 100% of all outstanding stablecoin liabilities.

The Standards require:

• Full Collateralisation: Reserves must be equal to or exceed the total value of circulating stablecoins.

• Daily Valuation: Issuers must mark reserves to market every day to confirm full coverage.

• Stress Tests & Overcollateralisation (when feasible): Issuers should regularly evaluate how reserves would hold up under adverse market conditions.

Restriction of Re-hypothecation: Reserves generally cannot be reused elsewhere to prevent liquidity risks.

Issuers must:

• Disclose Monthly Reserve Reports: Summaries of total stablecoins in circulation, reserve composition, and asset values.

• Engage Independent Audits/Attestations: These confirm that reserves exist and remain sufficient.

• Maintain a Transparent Governance Structure: With independent oversight and a code of business ethics.

The SCS framework emphasises:

• Consumer Protection: Issuers must clearly disclose risks, fees, and redemption terms.

• Business Ethics and Conduct: Issuers agree to uphold high ethical standards, which include safeguarding personal privacy and data.

Cybersecurity and AML Measures: Rigorous programs help protect users from fraud or theft.

“StableCheck” is a forthcoming certification process under the SCS framework. Issuers who prove compliance with the Standards can earn a “StableCheck” seal, signifying trustworthy reserve practices, governance, and consumer protections. This helps users and regulators quickly identify stablecoins that meet SCS requirements.

The SCS framework is a voluntary initiative; however, an increasing number of leading stablecoin issuers are already adopting it. Over time, regulatory bodies may reference or incorporate aspects of these Standards into formal rules, which could make them functionally mandatory for stablecoin issuers seeking broad market acceptance.

Yes. One of the key objectives is cross-border interoperability: stablecoins adhering to these Standards should be accepted and recognised by regulators and financial institutions in different jurisdictions, reducing friction in international transactions.

You can typically find more information through:

• SCS Policy Working Group Updates: Official bulletins or press releases.

• Issuer Websites: Many stablecoin issuers publish compliance and audit reports.

• Industry Conferences & Events: Panels, workshops, and forums where SCS updates are frequently discussed.

Regulatory Notices: Some financial regulators may provide guidance or frameworks referencing SCS.

Yes. Stablecoins are generally designed for global use. However, offering or facilitating stablecoin transactions in a specific jurisdiction may be subject to local regulatory requirements, especially for issuers and intermediaries such as exchanges, custodians, and wallet providers.

When individuals acquire stablecoins through peer-to-peer (P2P) transactions across jurisdictions, such acquisition may not necessarily violate local laws. However, the subsequent use or transfer of those tokens could still be restricted or regulated under applicable domestic laws.  Additionally, stablecoin users should recognise that participating in P2P transactions does not exempt them from broader financial regulation, including cybersecurity, anti-fraud, anti-money laundering (AML), sanctions compliance and tax reporting obligations.

Under the Stablecoin Standard (SCS) framework, reserve assets must be fully segregated, held in bankruptcy-remote structures, and accessible solely for redemption purposes. However, in practice, the treatment of reserve assets in insolvency proceedings may vary depending on the bankruptcy laws of the relevant jurisdiction. In some cases, these assets may be deemed part of the issuer’s general estate and may not be fully available for user redemption.

Therefore, it is equally important that each jurisdiction’s legal framework clearly prioritises the redemption rights of stablecoin holders in the event of issuer insolvency to ensure that user funds are adequately protected.

Yes. While the initial focus of the SCS framework is on fiat-backed, redeemable stablecoins, it is designed to evolve. In the future, crypto-collateralised, algorithmic, or DeFi stablecoins may be incorporated, provided they uphold the core principles of financial viability and stability, transparency and consumer protection, and financial crime prevention. SCS actively monitors technological and regulatory developments to inform future updates and ensure the framework remains responsive to market needs.