On Monday, the Financial Stability Board (FSB), a product of the G20 organization, unveiled its proposed guidelines for a global regulatory structure overseeing the operations of crypto assets. The international entity emphasizes that nations should confront the risks cryptocurrencies pose to global financial stability. The FSB contends that occurrences within the preceding year have underscored the “structural vulnerabilities of crypto assets and related players.”
G20’s Financial Stability Board Provides 9 Crypto Industry-Centric Recommendations for Countries and Standard-Setting Bodies
As stated in a newly published report, the G20’s Financial Stability Board (FSB) wants to rein in the crypto industry with tighter regulations and standardized frameworks. The FSB’s strategy for governing crypto asset operations hinges on encouraging collaboration between jurisdictional financial authorities and standard-setting bodies (SSBs). This cooperation aims to guarantee that such activities are governed by sturdy regulation and oversight matching the financial stability risks they pose, all while fostering responsible innovation.
The FSB has identified several notable failures within the crypto industry over the previous year, including the depegging event of Terra’s stablecoin and the implosion of FTX. “These events demonstrate interlinkages between crypto asset markets and the traditional financial system,” the authors of the FSB report outline. Nevertheless, the regulatory authority concedes that the impact on conventional finance was “limited” amid these two distinct incidents. Still, “interlinkages and possible spillovers between the crypto asset and traditional financial systems could markedly increase,” the FSB report explains.
The FSB further states:
These events have further highlighted that many crypto asset activities involve economic functions similar to those in traditional finance and should be comprehensively regulated and/or brought into compliance with new or existing rules as appropriate.
The FSB’s nine outlined recommendations stress that regulatory structures must also mandate that any crypto asset activities aiming to execute a similar economic role as those in the conventional financial system, are subject to identical or equivalent regulation. This should hold true regardless of how these crypto asset activities are carried out or the manner in which they are promoted, the report emphasizes. The FSB is of the opinion that the recommendations provide sufficient latitude for SSBs to formulate detailed standards tackling crypto sector-specific issues within their individual jurisdictions.
The FSB says the main concern is to “safeguard client assets,” remove “conflicts of interest,” from the sector, and establish “cross-border cooperation.” The FSB and the International Monetary Fund (IMF) “will deliver a joint report to the G20 in September 2023, which will synthesise the policy findings from IMF work on macroeconomic and monetary issues,” the FSB report concludes.
What do you think about the G20’s Financial Stability Board recommendations for the crypto industry? Share your thoughts and opinions about this subject in the comments section below.
from Bitcoin News https://ift.tt/dUFxQ4P
