FSB calls for parity in crypto market regulation

In response to the current volatility in the cryptocurrency market, the Basel, Switzerland-based Financial Stability Board today called for “an effective regulatory framework” to ensure that crypto activities that pose similar risks to traditional financial activities are “subject to the same regulatory outcomes, while taking into account the new functionalities of crypto assets and exploiting the potential advantages of the technology that underpins them.

The board statement had four key takeaways: crypto-assets and markets must be subject to effective regulation and oversight commensurate with the risks they pose domestically and internationally; cryptocurrency service providers must ensure compliance with existing legal obligations in the jurisdictions in which they operate; the turmoil in the crypto market highlights the importance of ongoing work by the FSB and international standards bodies to address potential risks to financial stability posed by crypto assets; and stablecoins should be subject to “robust” regulations and oversight by relevant authorities if they are to be adopted as a widely used means of payment or play an important role in the financial system.

The FSB said that member authorities will implement applicable international standards into national regulatory and supervisory frameworks “to the extent that it has not yet been reflected and will adopt the guidance, recommendations and best practices of agencies.” standardization bodies, where applicable”. The board will report to G20 finance ministers and central bank governors in October on regulatory and oversight approaches to stablecoins and other crypto assets.

Earlier this year, the FSB released a report warning that crypto-asset markets are changing rapidly and could reach a point where they pose a threat to global financial stability due to their scale, structural vulnerabilities and interconnectedness. increasing with the traditional financial system.

Michael J. Birnbaum