The Financial Stability Board (FSB) has published a proposed framework for global regulation of crypto assets.
The FSB stated in a release that “crypto-assets and markets must be subject to effective regulation and oversight commensurate with the risks they pose.”
While acknowledging there is currently little chance of systemic risk, the FSB noted that there is a potential for digital assets to rapidly scale and there is a need for “pre-emptive” evaluation of policy responses. Where crypto firms provide services similar to traditional financial services, regulation must be equally rigorous – “same risk, same regulation.” The FSB noted that many regions are making progress towards ensuring crypto activities are subject to robust regulation, but more work must be pursued.
The proposal is accepting comments from the public until December 15, 2022.
The FSB is also submitting to the G20 Finance Ministers and Central Bank Governors a set of proposals for the regulation and supervision of crypto-asset activities. The FSB is expected to finalize the proposed recommendations by mid-2023.
CI received feedback on the proposal from Linda Jeng, Chief Regulatory Officer at the Crypto Council for Innovation. Jeng stated:
“On the whole, international coordination is a good thing. It means companies don’t have dozens of different rules to follow. But to achieve the full benefits of blockchain, a careful and considered approach is required. A heavy-handed approach could cut this technology off at its knees. The proposed FSB recommendations are designed to be complementary and cover a wide range of topics including regulatory powers, cross-border cooperation, and data management. They are grounded in the principle of “same activity, same risk, same regulation.”
The Crypto Council commended the FSB for stating that regulation should “take account of novel features and specific risks of crypto-assets.”
“Overall, it’s an important step towards international consistency and regulatory clarity. But, it’s important that the FSB’s final recommendations consider crypto’s unique properties and facilitate digital economies where Web3’s benefits of open and fair access to lower cost and efficient financial services can be fully realized,” said Jeng. “We look forward to collaborating with the FSB members and contributing to next steps.”