On Monday, the G20’s watchdog announced that it would propose global rules for cryptocurrencies in October. The recent announcement follows the latest happenings in the crypto markets which have shown that there is a need to regulate the highly speculative crypto space.
According to the Financial Stability Board (FSB), the latest happenings in the crypto world have shown that the sector is associated with volatility, and structural vulnerabilities, and therefore requires some kind of measure to keep it in check. The watchdog also added that the crypto sector could affect the wider financial system if not put in check. “The failure of a market player, in addition to imposing potentially large losses on investors and threatening market confidence arising from crystallization of conduct risks, can also quickly transmit risks to other parts of the crypto-asset ecosystem,” the FSB said in a statement.
Per Wikipedia, the Financial Stability Board (FSB) is an international body that monitors and makes regulations about the global financial system. One of its major goals is to provide recommendations and explore how to treat globally systemically important financial institutions to prevent financial crises.
Prior to this new call for regulation, the Financial Stability Board (FSB) which is made up of sub-regulators treasury officials, and executive officials of central banks from the G20 countries, had only stuck to monitoring the crypto sector but with the imminent development, it will be embarking on new tasks aside monitoring.
The watchdog said it “will report to the G20 Finance Ministers and Central Bank Governors in October on regulatory and supervisory approaches to stablecoins and other crypto-assets.” It is pertinent to know that the FSB has no lawmaking ability but its members have a commitment to apply its recommendations and regulatory principles in their countries. “FSB members are committed to using the enforcement powers within the legal framework in their jurisdiction to promote compliance and act against violations,” the FSB said. The international body added that while crypto assets are mostly used for speculative reasons, the sector isn’t free from regulation and must follow laid-down rules.
