TheCorporateCounsel.net

On Monday, the Financial Stability Board (FSB), a group of financial regulators, treasury officials and central bankers from the G-20 nations, announced that it will be proposing robust global rules for cryptocurrencies in October of this year.

Back in February, the FSB published an updated risk assessment on crypto-assets, which outlined the group’s concerns over the rapid growth in crypto-assets. The report warned that crypto-asset markets are fast evolving, and could reach a point “where they represent a threat to global financial stability due to their scale, structural vulnerabilities and increasing interconnectedness with the traditional financial system.” In its statement earlier this week, the FSB notes:

The recent turmoil in crypto-asset markets highlights their intrinsic volatility, structural vulnerabilities and the issue of their increasing interconnectedness with the traditional financial system. The failure of a market player, in addition to imposing potentially large losses on investors and threatening market confidence arising from crystallisation of conduct risks, can also quickly transmit risks to other parts of the crypto-asset ecosystem. It may have spill-over effects on important parts of traditional finance such as short-term funding markets. An effective regulatory framework must ensure that crypto-asset activities posing risks similar to traditional financial activities are subject to the same regulatory outcomes, while taking account of novel features of crypto-assets and harnessing potential benefits of the technology behind them.

The FSB plans to report to the G-20 Finance Ministers and Central Bank Governors in October on regulatory and supervisory approaches to stablecoins and other crypto-assets. The FSB plans to work with international standard-setting bodies on a global regulatory approach to crypto-assets.

– Dave Lynn