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.
See related article: India working with IMF, FSB on crypto regulations, says economic affairs secretary
Fast facts
- 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.
See related article: India’s finance minister urges G20 nations to come on board to regulate crypto