Financial Stability Board outlines need for international crypto regulation
The Financial Stability Board (FSB), an international body that monitors the global financial system, has published a statement calling for regulation of cryptoasset activities on an international level.
Amid an unfolding crypto winter, the FSB says the “recent turmoil” reveals the “intrinsic volatility” of fast-evolving cryptoassets.
Their interconnectedness with the traditional financial system means cryptoassets must be subject to an effective regulatory framework, the FSB says, while “harnessing potential benefits of the technology behind them”.
This regulation must extend to domestic and international oversight, ensuring stablecoins and other cryptoassets do not operate in a regulation-free space and adhere to relevant existing requirements in line with the principle of “same activity, same risk, same regulation”.
Stablecoins, with their increasing exploration, adoption and connection to wider financial services, “need to be held to high regulatory and transparency standards”.
The FSB says it will report to the G20 Finance Ministers and Central Bank Governors in October on regulatory and supervisory approaches to stablecoins and other cryptoassets, recommending international consistency and cooperation.
The FSB will also submit a public consultation report on the review of its recommendations for the regulation and oversight of “global stablecoin” arrangements, including how existing frameworks may can be tightened up to close regulatory gaps.
It also took the opportunity to remind individuals and service providers operating in the cryptoasset space that they should meet all regulatory, supervisory and oversight requirements of their particular jurisdiction.
“FSB members are committed to using the enforcement powers within the legal framework in their jurisdiction to promote compliance and act against violations,” the oversight body says.
While work is ongoing, the recent volatility and uncertainty in cryptoasset markets underlines the importance of the FSB and other international standard-setting bodies in addressing financial stability risks.
“The FSB will continue to facilitate cross-border and cross-sectoral cooperation among national financial authorities and international standard-setting bodies as they work towards developing a common understanding of the wide spectrum of cryptoassets,” the FSB adds.
This will hopefully address potential gaps in standards, the development of new standards and guidance and new types of risks that may not be “captured by existing regulatory frameworks”.