Financial Stability Board releases framework for global crypto-asset regulation

The Financial Stability Board, the international body that monitors and makes recommendations for the global financial system, Global regulatory framework Targeting cryptocurrency activities, it issued several “high-level” recommendations on the regulation, supervision and oversight of the crypto industry and markets.

The watchdog said the framework and recommendations were developed based on feedback received during public consultations and a thorough review of events in the cryptocurrency industry over the past year.

According to the FSB:

“Last year’s events have highlighted the inherent volatility and structural vulnerabilities of crypto assets and related players.”

Moreover, high-profile collapses in industries such as FTX show that risks can spread rapidly throughout the ecosystem, with a domino effect if a key service provider fails.

The FSB believes that the deepening ties between traditional finance and cryptocurrencies could increase the level of risk in the broader financial markets. To address this potential threat, they are proposing to introduce stricter regulations for the cryptocurrency sector.

The FSB framework aims to ensure that regulations related to cryptocurrencies and stablecoins are comprehensive and consistent across borders. It also aims to ensure that these rules do not stifle innovation in the industry.

Recommendation

The watchdog published two different high-level datasets. Recommendation as part of that framework. The first set contains new recommendations and the second set contains previous recommendations for stablecoins that have been revised in light of recent events.

The recommendations primarily focus on addressing various risks to financial stability and establishing standards for regulators to develop their own regimes.

The FSB has strengthened many of its previous recommendations to improve three key areas: protecting client assets, addressing risks arising from conflicts of interest, and improving cross-border cooperation. He said he responded better.

Nine top-level recommendations include guidance on governance, disclosure, risk management, regulatory tools, institutions, and cross-border cooperation between regulators.

The FSB also clarified that these recommendations do not apply to central bank digital currencies, which are essentially viewed as digital forms of central bank liabilities.

The post-release global crypto regulatory framework of the Financial Stability Board first appeared on CryptoSlate.