Global crypto regulations to be Recommended by FSB by 2023

FSB plans to unveil regulations for the crypto sector by early 2023.
The market turmoil caused by FTX’s collapse has compelled regulators to take act.
FTX’s founder Sam Bankman-Fried was arrested.

Need of the hour

The international body that makes recommendations and monitors the global financial system, Financial Stability Board (FSB), is planning to execute rigid regulations over the crypto sector in early 2023.

After the collapse of one of the world’s largest crypto exchanges, FTX, the crypto market has again lost its momentum in the crypto winter. Authorities are now more compelled than ever to impose severe regulations over the industry.

As reported by the Financial Times, Secretary General of the FSB, Dietrich Domanski stated that “Recent events have reinforced the recognition that it is indeed urgent to address risks.” He added on the last day of his 5-year term: “I think the work plan will reflect the urgency.”

As per FSB’s official press release, the FSB Regional Consultative Group (RCG) for the Americas held on December 8th, at the Grand Cayman island to discuss the risks to financial stability, including non-bank financial intermediation and crypto assets. They also brainstormed on the “ways to enhance crisis preparedness and management in the region and the importance of cross-border cooperation.”

The agency noted that “Members exchanged views on the use of crypto-assets in their jurisdictions and policy issues faced in managing risks against the backdrop of the collapse of FTX and the turmoil in crypto-asset markets more generally. The group discussed the FSB’s recently published consultative reports and ways to promote robust information-sharing and consistent and effective regulation of crypto-assets and markets, including stablecoin arrangements beyond FSB member jurisdictions.”

In May 2022, Terra UST crash led to the downfall of many firms, including Three Arrow Capital, Celsius Network, Voyager Digitals among others. Also, the market has suffered a loss of an estimated $300 billion. Recently, on December 12, the FTX’s former CEO and co-founder Sam Bankman-Fried was arrested by the Royal Bahamas police.

According to the FSB Chair’s letter to G20 leaders as on November 11, the FSB has “continued to work to enable the financial system to adapt to secular trends.” Also, they have taken measures for the same:

Firstly, they have created a Roadmap for Enhancing Cross-Border Payments to focus mainly in 3 areas. “They are Payment System interoperability and extension, Cross-border data exchanges and message standards and Legal, regulatory and supervisory frameworks.” Secondly, “development in the comprehensive framework for the regulations, supervision of oversight of crypto-assets activities and markets.” At last, working on financial risks from climate change via improvement to disclosures, data, vulnerabilities assessments and regulatory and supervisory policy.

Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing