FSB Proposes First Global Regulatory Framework for Crypto

The Financial Stability Board (FSB), which coordinates financial rulemaking among Group of 20 Economies (G20), published a proposed framework for the international regulation of crypto-asset activities.

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The proposals set out the key issues and challenges for the regulation and supervision of crypto-asset activities and markets and outline the FSB’s proposed approach for establishing a comprehensive regulatory framework to address the financial stability risks.

Currently, while regulators caution investors they risk losing every penny, the sector is largely unregulated in most nations, merely required to abide by laws protecting against money laundering and terrorism funding.

The FSB recommends that effective regulatory and supervisory frameworks should be based on the principle of “same activity, same risk, same regulation”.

To promote a consistent regulatory framework, high regulatory standards should also apply to crypto-assets – such as stablecoins, FSB said.

"Concerns about the risks they pose to financial stability are therefore likely to come back to the fore sooner rather than later," Klaas Knot, the Dutch central bank president who chairs the FSB, said in a letter to G20 finance ministers meeting in Washington this week.

The proposals have been put out to public consultation until Dec. 15, before being finalised by mid-2023, when FSB members would be expected to fast-track their implementation.