July 13, 2022
By Sharan Kaur Phillora
The Financial Stability Board (FSB), a global financial regulator including all G20 countries, is preparing to propose international regulations for cryptocurrencies and stablecoins in October.
Here’s what we know:
The FSB on Monday issued a statement on the international regulation and supervision of crypto asset activities, announcing a major crypto regulation effort.
The watchdog is planning to report to the G20 finance minister and central bank governors in October 2022 on regulatory and supervisory approaches to stablecoins and other crypto assets. By that time, the FSB targets a public consultation report on the review of recommendations, including “how existing frameworks may be extended to close gaps and implement the high-level recommendations.”
The G20 authority also plans to submit another public consultation report that proposes recommendations for promoting global consistency of regulatory and supervisory approaches to other crypto-assets.
“These combined efforts of the FSB and the international standard-setting bodies are aimed at minimizing the risk of fragmentation and regulatory arbitrage,” the FSB noted.
As such, a stablecoin that enters the mainstream of the financial system needs to comply with “high regulatory and transparency standards, maintain at all times the reserves that preserve stability of value and meet relevant international standards,” the FSB stated.
The FSB’s plan to propose recommendations for global unified stablecoin regulation is quite a challenging task, according to some industry executives.
The FSB previously outlined multiple risks stemming from the cryptocurrency industry in February this year. The authority was specifically concerned about the potential failure of certain stablecoins, the issue of data gaps in the crypto industry as well as the potentially threatening outcomes of the rapid growth of decentralized finance.
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.