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- The G-20 financial regulator has been working on a crypto regulatory framework that can serve all nations.
- The FSB had to hasten up with its report and give a specific date for the report’s release due to the current crypto winter.
On July 11, the financial stability released a press release regarding when it will present its crypto regulations recommendations. The FSB is the G-20’s financial watchdog. When these top economies meet, the FSB will submit its proposals to the G-20 by October.
Presentation of the FSB’s report will be by October
One of the primary responsibilities of the FSB is to monitor financial systems worldwide and suggest improvements or modifications. The G-20 has charged its watchdog to develop a framework for regulating new asset classes (such as cryptocurrencies, including stablecoins). Part of the G-20’s press release states that the body aims to promote and ensure regulatory and supervisory consistency among all nations.
Also, it would keep developing non-biased policies for newer technologies such as cryptos and their underlying technology (blockchain technology). However, these policies are guided by a uniform activity, risk, and regulation principle. The G-20 financial watchdog admitted that crypto assets and stablecoins are fast evolving.
Related: Bitcoin not in focus: G20 to create a framework for stablecoins by 2022
However, it noted that the current downturn in the market is negatively affecting some aspects of traditional finance systems, notably, short-term funding markets. Hence, the FSB suggested that the crypto and traditional finance markets must operate under the same regulatory policies. The FSB also indicated that authorities must not discard the newer dimensions that crypto assets have brought into traditional finance systems.
It further suggested that national regulators must critically appraise the technology behind these crypto assets. The FSB explained that the regulation and supervision of crypto assets must correspond with the risks they pose at the local or universal levels. In addition, crypto-asset providers must always comply with the current legal frameworks within their base of operations.
The FSB will present its paper titled “recommendations on the regulation and supervision of crypto assets and stablecoins” at the G-20 conference scheduled for October this year. The G-20 central bank governors and finance ministers will attend the meeting. Earlier this year, the G-20 regulator released a report on whether cryptos are a risk to the stability of traditional finance systems.
Greater scrutiny over the crypto market
The report concluded that the crypto market could scale so big that it would pose a risk to financial stability worldwide. The report explained that cryptos pose these risks because they are not structurally balanced and are interconnected with the traditional finance market. Other authorities are gradually developing their crypto regulatory framework.
Last month, the European Union finalized details about its crypto regulation under the markets in crypto assets regulation (MiCA). Earlier in the year, the US President (Joe Biden) issued an executive order to US regulators mandating them to develop a regulatory framework for crypto assets in the country. Last week, the US Treasury department submitted its proposed crypto regulatory framework to the president.
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