Today, the Financial Stability Board (FSB) announced that it will develop its own regulations to ensure “strong regulation and oversight” of cryptocurrencies. The 5 proposed items recommend international cooperation for further inspection.
FSB to release cryptocurrency regulation report in October
The group of G20 treasury officials and central bank governors announced that they will outline their regulatory and supervisory approach to stablecoins and other cryptocurrencies in a report to G20 finance ministers and central bank governors. The FSB reports that it is working on cryptocurrencies, with a detailed report due in October. In a statement made today, it was stated that stablecoins and cryptocurrencies are growing rapidly, therefore, sharp price movements can have negative effects on traditional markets.
According to a statement from the FSB, the recent volatility in the cryptocurrency markets “highlights the inherent volatility, structural vulnerabilities and the growing problem of their interconnection with the traditional financial system.”
Today’s announcement follows the dramatic collapse of the Terra ecosystem in May that left several well-known crypto lenders and hedge funds in a liquidity crisis and ultimately led to their bankruptcy. Notably, the announcement is also the first time the FSB has proposed specific regulations for the crypto market. The FSB has so far refrained from taking any action, despite its constant monitoring of the industry.
5 items for cryptocurrencies from the G20
The reaction of the crypto community to the news of the upcoming legislation has been contradictory. The FSB’s recommendations included the following items:
- Because of their widespread use, stablecoins will be under the scrutiny of the relevant lenses.
- The FSB will work with other international regulators to address potential risks.
- Exchanges must comply with the legal obligations in the regions in which they operate.
- FSB members will take care in the implementation of international stands.
- Cryptocurrencies should be put under active regulatory scrutiny because of the risk they carry.
Regarding these statements, Pedro Herrera, a senior blockchain researcher at DappRadar, noted:
Regulations in the cryptocurrency market have always aroused suspicion as they contradict the core concepts of free and decentralized cryptocurrency.
Meanwhile, Bitcoin.com’s legal counsel, Joseph Collement, is not optimistic about the potential benefits of FSB regulations. According to him, FSB regulations are too late to be beneficial for the business as a whole. According to Joseph Collement:
Regulators are aware that businesses like Celsius are fake banks without FDIC insurance since 2018. But they failed to retain customers.
However, some experts consider the action of the FSB positive. ByBit’s head of communications, Igneus Terrenus, interprets these statements negatively. Terrenus said it is encouraging that more and more authorities and regulators are adopting crypto. This emerging consensus will guarantee the industry’s healthy growth and rapid change in the years to come.
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