The Financial Stability Board, an international body that oversees and makes recommendations on the global financial system, has completed its global regulatory framework for crypto asset activities and has issued several high-level recommendations for the regulation, oversight and oversight of the cryptocurrency. industry and markets.
The watchdog said the framework and recommendations were developed based on feedback received during the public consultation and an in-depth review of events that have taken place in the crypto industry over the past year.
According to the FSB:
“The events of the past year have exposed the intrinsic volatility and structural vulnerabilities of crypto-assets and related players.”
In addition, high-profile industry collapses such as FTX have demonstrated the potential for a domino effect when critical service providers fail, causing risk to quickly spread throughout the ecosystem.
The FSB believes that the deeper connection between traditional finance and cryptocurrencies could increase risk levels in the broader financial market. To control this potential threat, they propose to introduce stricter regulations for the cryptocurrency sector
The FSB’s framework aims to ensure that regulation regarding cryptocurrencies and stablecoins is comprehensive and consistent across borders. It is also intended to ensure that these rules do not hinder technological innovation in the industry.
Recommendations
The watchdog published two sets of separate high-level recommendations as part of its framework. The first set contains new recommendations, while the second contains previous recommendations on stablecoins that have changed in light of recent events.
The recommendations focus primarily on addressing the various risks to financial stability and establishing a basis for regulators to build their own regimes.
The FSB stated that they have improved some of their previous recommendations to better address three key areas: protecting client assets, addressing risks arising from conflicts of interest and improving cross-border cooperation.
The nine top-level recommendations include guidelines for governance, disclosure, risk management, regulatory tools and regimes, as well as cross-border cooperation between regulators.
The FSB also clarified that these recommendations do not apply to central bank digital currencies, which are essentially considered central bank liabilities in digital form.
The message that the Financial Stability Board is releasing the framework for global regulation of crypto assets first appeared on CryptoSlate.