The Financial Stability Board, which is funded by the Bank for International Settlements and includes members from all G20 economies, on Monday published a global regulatory framework for stricter controls on cryptocurrency assets. The board’s mandate according to its website is to promote global financial stability, though it’s recommendations lack formal authority.
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- The framework is based on the principle of “same activity, same risk, same regulation,” according to the report by the group, known as the FSB.
- The FSB said the recommendations aim to ensure adequate safeguarding of client assets, addressing risks associated with conflicts of interest, and strengthening cross-border cooperation.
- FSB said the recommendations do not cover all specific risk categories related to crypto-asset activities. Central Bank Digital Currencies (CBDCs) are not subject to the recommendations.
- The recommendations state that authorities should ensure they have the powers to address the risks posed by crypto service providers to evade regulation and oversight by operating in foreign jurisdictions.
- “The events of the past year have highlighted the intrinsic volatility and structural vulnerabilities of crypto-assets and related players. They have also illustrated that the failure of a key service provider (FTX) in the crypto-asset ecosystem can quickly transmit risks to other parts of that ecosystem,” the FSB said in its statement.
- The recommendations are addressed to financial regulatory, supervisory and oversight authorities at a jurisdictional level, FSB said.
- The final recommendations published on Monday took into account feedback from a public consultation announced in October last year.
- The FSB is chaired by Klaas Knot, president of De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland.
- The FSB will review the global implementation of its recommendations by the end of 2025.
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