Many regulatory authorities made crypto regulations their priority, now the Financial Stability Board joins the queue.
In 2009, the G20 London Summit formed the Financial Stability Board. FSB is an international body that has the task of keeping eye on financial stability. And it also has the responsibility to make recommendations to keep stability in global finance. Now, it has insisted on bringing cryptocurrencies regulations given recent crypto market downfall.
On Monday, 11th July, Financial Stability Board asked for regulations on crypto assets, in a press release. The press release also demanded some provisions specifically for stablecoins. It said that there is a need for high regulatory standards for so-called stablecoins. Further it also asked for transparency and asked them for maintaining their reserves utilized for backing of these crypto assets.
The FSB is preparing a report constituting past year finance performances of different financial institutions. It will submit the report to Finance ministers and Governors of Central Banks of G20 countries, in the month of October. FSB came to know some important insights while preparing the report. It found that the crypto market has its effect on traditional markets.
According to FSB’s statement, if a firm in crypto space fails then it can create a ripple effect all over the market. Also, this could affect traditional finance sectors like short-term fundings. Most probably, this statement of international financial authority indicated Terra network’s collapse. It’s worth noting how the fall of Terra created a ripple effect all around the crypto space.
The Former Financial Stability Forum said that the market crash clearly shows the market volatility. This also reflects the crypto market has vulnerable structure and its compatibility issues with traditional finance. Further FSB said that crypto and traditional markets may have similar functions. But crypto assets are used majorly for speculative and gambling purposes, they added.
The FSB expressed its concerns about the stablecoins given their wide use across different sectors. FSB said that they could put financial stability into risk if there were not satisfactory regulations. They also called out for international cooperation and said it’s crucial to move ahead towards regulations. FSB will soon release a report outlining the suggestions of approaches to consider for international supervision.
Source: https://www.thecoinrepublic.com/2022/07/13/fsb-suggested-to-invoke-crypto-regulations-especially-for-stablecoins/