G20 Regulators Have Called For New Global Cryptocurrency Legislation.
In October, the Financial Stability Board will present a report on regulatory and supervisory measures to crypto assets to the G20 Finance Ministers and Central Bank Governors. The FSB cites recent market volatility as proof of the risks that crypto assets pose to financial stability.
On Monday, the Financial Stability Board (FSB) advocated for new global regulations for cryptocurrencies and announced that it will present a report on regulatory and supervisory approaches to stablecoins and other crypto assets to the G20 Finance Ministers and Central Bank Governors in October.
Recent market turmoil was cited by the group of regulators, government officials, and central bankers as evidence of a risk to financial stability, emphasizing that the failure of a market player can quickly transmit risks to other parts of the ecosystem and have spillover effects into traditional finance.
The FSB statement specifically included “so-called” stablecoins, which have been on the agenda for numerous financial regulators since before the Terra crash in May.
The FSB is a Swiss-based multinational organization that manages and supports worldwide financial stability. Its members include national authorities and central banks from 24 countries, including the United States, Russia, and China, and it works with another 70.
While it is emphasizing current market concerns as a reason to act, the FSB has been looking into cryptocurrency for some time. It produced a report in February examining the dangers posed by crypto assets, saying that their scale, structural vulnerabilities, and rising interconnection with the traditional financial system could jeopardize global financial stability.
The FSB’s position is consistent with recent remarks from senior finance officials and committees. The Bank of England’s Financial Policy Committee warned on July 5 that crypto assets could one day represent a risk to the wider financial system and asked for “enhanced regulation.” This attitude was mirrored last Friday by US Federal Reserve vice chair Lael Brainard, who stated that the sector requires “strong guardrails.”
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