Financial Stability Board to tighten crypto regulation

The G20’s advisory body responsible for financial regulation will present proposals for regulating the cryptocurrency market, with a concrete timeline for their implementation, in early 2023. According to the Financial Times.

The catalyst for the initiative was the collapse of FTX.

While the EU and other countries have created regional rules, global policies have faced criticism for creating a regulatory vacuum. The vacuum allowed, in particular, Sam Bankman-Fried’s companies to cross borders and reach billion-dollar sizes before their collapse, the publication noted.

Recent events underscored the understanding that there is an urgent need to address the risks, said Dietrich Domanski, the secretary-general of the organization.

The official noted that there are constraints on the speed of developing regulatory requirements due to the need to delve into the specifics of how the digital asset market operates. In this regard, global cooperation plays an increasing role.

One of the objectives of the plan of work is to counter the perception that all this crypto-regulatory development is fragmented and slow, and not focused on a single overarching goal. […] It is necessary to create a regime in which VASP will meet the same standards as banks if they provide the same services, said Domanski.

Following the meeting, the FSB called for ‘continuous improvement of rulemaking’. It is also proposed to establish standards for creating a global regulatory and supervisory system, including in jurisdictions that are not members of the organisation.

The advisory body pledged to fill gaps in DeFi coverage. The FSB will also work on establishing ‘rules of the game’ for firms where there is a ‘combination of activities that are traditionally separated’. Additionally, there is a need to clarify governance mechanisms, ensure transparency and protect client funds, the official said.

Earlier in October the Financial Stability Board concluded that none of the existing stablecoins meet the standards set for digital assets by the central banks of the world’s largest economies.

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