Alexander Savenkov This Monday saw the Financial Stability Board (FSB), an entity established by the G20 organization, release its proposed criteria for a universal regulatory framework governing crypto assets operations. The global entity emphasizes the need for countries to acknowledge and manage the potential risks cryptocurrencies present to worldwide financial stability. The FSB asserts that the past year has underscored the “structural vulnerabilities of crypto assets and their related actors.”
G20’s Financial Stability Board Issues 9 Crypto-Specific Recommendations for Nations and Standard-Setting Bodies
According to a recently disclosed report, the G20’s Financial Stability Board (FSB) advocates tightening regulations and implementing standardized frameworks to regulate the crypto industry. The FSB’s approach for overseeing crypto asset activities depends on promoting cooperation among domestic financial authorities and standard-setting bodies (SSBs). This partnership seeks to ensure these activities are subject to robust regulation and supervision in line with their financial stability risk, while still promoting responsible innovation.
The FSB points to several significant disruptions within the crypto industry over the last year, including Terra’s stablecoin depegging event and the FTX collapse. “These events exhibit the connections between crypto asset markets and the traditional financial system,” state the FSB report’s authors. However, the regulatory body admits that the impact on traditional finance was “limited” during these two separate events. Nonetheless, “links and potential spillovers between the crypto asset and traditional financial systems could significantly escalate,” the FSB report details.
Further comments from the FSB include:
These incidents have underscored the fact that many crypto asset activities bear economic functions comparable to those in conventional finance and should be fully regulated or made compliant with new or existing rules, as appropriate.
The FSB’s nine proposed recommendations emphasize that regulatory frameworks must also stipulate that any crypto asset activities performing similar economic functions as those in the traditional financial system must be subject to the same or equivalent regulation. This should apply regardless of how these crypto asset activities are undertaken or marketed, as stressed in the report. The FSB believes these recommendations allow enough flexibility for SSBs to develop detailed standards addressing crypto sector-specific issues within their jurisdictions.
According to the FSB, the primary objective is to “protect client assets,” eliminate “conflicts of interest” within the sector, and encourage “cross-border cooperation.” The FSB, in collaboration with the International Monetary Fund (IMF), will submit a joint report to the G20 in September 2023, summarizing the policy insights from the IMF’s work on macroeconomic and monetary matters,” the FSB report concludes.
What is your perspective on the Financial Stability Board’s recommendations for the crypto industry under G20? Feel free to share your insights and views on this topic in the comment section below.
Table of Contents
Frequently Asked Questions (FAQs) about Global Crypto Regulations
What entity is pushing for global crypto regulations and standards?
The Financial Stability Board (FSB), a product of the G20 organization, is pushing for global crypto regulations and standards.
What are the risks the FSB aims to manage with these regulations?
The FSB aims to manage the risks that cryptocurrencies pose to global financial stability, focusing on the structural vulnerabilities of crypto assets and their related actors.
How many recommendations has the FSB issued for nations and standard-setting bodies?
The FSB has issued nine crypto industry-centric recommendations for nations and standard-setting bodies.
What were the notable failures identified within the crypto industry?
The FSB highlighted several notable failures, including the depegging event of Terra’s stablecoin and the implosion of FTX.
What is the FSB’s primary concern with the crypto industry?
The FSB’s primary concern is to safeguard client assets, remove conflicts of interest, and establish cross-border cooperation in the crypto sector.
When is the FSB expected to deliver a joint report with the IMF to the G20?
The FSB and the International Monetary Fund (IMF) are expected to deliver a joint report to the G20 in September 2023.
More about Global Crypto Regulations
- Financial Stability Board Official Website
- G20 Information
- Overview of Crypto Regulations Worldwide
- Background on Terra’s Stablecoin Depagging Event
- Background on FTX Implosion
- About International Monetary Fund (IMF)
- Understanding Cryptocurrency Risks
6 comments
Terra’s depegging event was a wake-up call. These things need oversight. Thumbs up for FSB.
the FSB is finally stepping up! been saying for a long time we need some kind of regulations for cryptos. Hope they do it right!
I dont get it why always regulation? isn’t the whole point of crypto to be decentralized, I mean what’s next, are they going to regulate our memes too?
Just let the market do its thing. Its called free market, government always mess things up.
regs can be good and bad, we gotta make sure innovation doesn’t get stifled! but some standards might actually help the industry grow more, just my 2 cents…
Impressive. Looks like the FSB understands the complex nature of crypto markets. It’s a balancing act – supporting innovation while managing risks. Let’s see how this unfolds.