The Financial Stability Board (FSB) – an organization created by G20 countries that oversees the international monetary system – will reportedly propose a regulatory framework focused on digital assets. The draft bill comes as a result of the recent turmoil in the market and will have a global character.
“Strong” rules for investors to limit risk
After the past few months, in which the crypto space saw several collapsed projects and investors lost significant sums of money, the FSB planned to step in and defuse the unrest. According to a Reuters coverage, the organization will propose “strong” global regulations in October that could regulate the “speculative” industry.
Prior to the move, the FSB – which includes watchdogs, top bankers and Group of 20 economies (G20) officials – stressed that cryptocurrencies do not pose a systemic risk to investors and only monitor niches. The recent volatility of the market and several failed projects, however, have changed its outlook:
“In addition to jeopardizing market confidence arising from the failure of a market player to impose potentially large losses on investors and crystallization of conduct risks, risks also quickly disseminate to other parts of the crypto-asset ecosystem. can do.”
Stablecoins have become a largely controversial topic since the collapse of the UST. In its proposal, the FSB will focus on these crypto assets and explain how they can be used as a payment method:
“The FSB will report in October to G20 finance ministers and central bank governors on regulatory and supervisory approaches to stablecoins and other crypto assets.”
Industry critics often claim that digital assets can participate in criminal activities such as money laundering, drug deals and terrorist financing. On that note, the FSB vowed to use its powers and “promote compliance and take action against violations.”
The opinion of the FSB chairman
Earlier this year, Klaus Knott, the organization’s president, raised concerns that the digital asset market could negatively affect the global monetary network in the future. Therefore, he argued that “policy work on cryptocurrency assets is a priority for the FSB.”
Knott outlined that stricter rules should initially be applied to the “unbacked” tokens, stablecoins and DeFi sector. In their view, the FSB is the right entity to create a regulatory framework because of its expertise and engagement with government entities in G20 economies:
“Thanks to its broad international and cross-sectoral membership, including the regional Standard Settlor, the FSB is well positioned to take a leading role in the design of a coherent framework for crypto assets.”
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