Financial Stability Board recommends stricter global crypto regulation after year of industry blow-ups

The Financial Stability Board (FSB) published on Monday a global regulatory framework for crypto-asset activities to provide a global regulatory and supervisory foundation for crypto. The recommendations made to the G20 – the 20 leading economies of the world – are based upon the principle of “same activity, same risk, same regulation.”

Fast facts

• The FSB said it has strengthened recommendations primarily in three areas, to ensure adequate safeguarding of client assets, addressing risks associated with conflicts of interest, and strengthening cross-border cooperation.
• FSB said the recommendations focus on addressing risks to financial stability and do not cover all specific risk categories related to crypto-asset activities. Central Bank Digital Currencies (CBDCs) are not subject to these recommendations.
• The recommendations state that authorities should ensure they have the powers to address the risks posed by crypto service providers to evade regulation and oversight by operating in foreign jurisdictions.
• “The events of the past year have highlighted the intrinsic volatility and structural vulnerabilities of crypto-assets and related players. They have also illustrated that the failure of a key service provider (FTX) in the crypto-asset ecosystem can quickly transmit risks to other parts of that ecosystem,” the FSB said in its statement.

• The recommendations are addressed to financial regulatory, supervisory and oversight authorities at a jurisdictional level, FSB said.

• The final recommendations published on Monday took into account feedback from a public consultation announced in October last year.

• The FSB is chaired by Klaas Knot, president of De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland, and hosted by the Bank for International Settlements.

• The FSB will review the global implementation of its recommendations by the end of 2025.

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Pradipta Mukherjee

Pradipta Mukherjee is a business reporter and has worked for Bloomberg News and Business Standard in India. An MBA and a post-graduate in Economics, Mukherjee focuses on financial markets and corporates. She is a Mary Morgan Hewitt award recipient for Women in Journalism. She has also won the Jefferson Fellowship; the Thomson Reuters Foundation fellowship on ‘Social Media and Digital Journalism’ at The Chinese University of Hong Kong; and most recently, the Kiplinger Fellowship at Ohio University, USA.

pradipta.mukherjee@forkast.news

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Eve Yeo

Eve is an experienced business reporter and commodities news editor. She has previously worked at print and media outlets such as Singapore Press Holdings, Shanghai Metals Market, S&P Global Platts and Argus Media.

eve.yeo@forkast.news