• The Financial Stability Board (FSB) has an “ambitious work programme” for finalizing a crypto asset regulatory framework in 2023.
• FSB chair Klaas Knot said many existing stablecoins would not comply with the global standards established by the BIS and International Organization of Securities Commissions.
• The FSB will publish its final recommendations for regulatory and supervisory approaches to crypto assets and stablecoins in July, followed by recommendations for standard-setting bodies and implementation monitoring.
Financial Stability Board Addresses Crypto Assets
The Financial Stability Board (FSB), an advisory body created by the G20 and affiliated with the Bank of International Settlements (BIS), has an “ambitious work programme” for finalizing a crypto asset regulatory framework in 2023. FSB chair Klaas Knot recently outlined plans to address key threats to financial stability this year in a letter sent to the G20’s finance ministers and central bank governors.
Stablecoin Regulatory Framework Recommendations
Knot said that many existing stablecoins would not comply with the high-level recommendations of the FSB, nor would they meet the international standards set out by BIS Committee on Payments and Market Infrastructures-International Organization of Securities Commissions guidance. In July, these organizations released guidance extending “same risk, same regulation” principles to stablecoins that were originally developed in response to the 2008 financial crisis.
In July, after publishing its final recommendations for regulatory and supervisory approaches to crypto assets and stablecoins, the board will make further recommendations for specific standard-setting bodies as well as monitor their implementation.
The G20 ministers and bankers group is meeting Feb. 24–25 in Bengaluru, India to discuss these issues further. This follows a Feb 16 report from FSB indicating it was increasing its attention to DeFi due to potential connections with traditional finance.
Crypto assets are becoming increasingly important topics of discussion among regulators worldwide as more institutions recognize their growing importance within traditional finance markets. With its ambitious work programme for completing a global crypto asset framework in 2023, it remains unclear how much progress will be made on this front over the coming years but it is clear that regulators are taking steps towards greater oversight of digital currencies and other blockchain-based technologies.