G20 regulators call for new global rules on cryptocurrencies

The Financial Stability Board (FSB) called for new global rules for cryptocurrencies on Monday, and will submit a report to the G20 Finance Ministers and Central Bank Governors in October on regulatory and supervisory approaches to stablecoins and other crypto assets.

The body of regulators, government officials and central bankers pointed to recent market turmoil as evidence of risk to financial stability, highlighting 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 statement from the FSB made particular reference to “so-called” stablecoins, which have been on the agenda for several financial authorities since even before May’s Terra crash.

The FSB is an international body based in Switzerland that coordinates on and promotes international financial stability. Its members include national authorities and central banks from 24 jurisdictions, including the US, Russia and China, and conducts outreach with approximately a further 70.

But while it’s emphasizing current market issues as an impetus to act, the FSB has been looking at crypto for a while now. In February it published a report assessing risks from crypto assets, warning that they could pose to global financial stability due to their scale, structural vulnerabilities and increasing interconnectedness with the traditional financial system.

The FSB’s statement aligns with several recent comments from senior finance officials and committees. On July 5, the Bank of England’s Financial Policy Committee warned that crypto assets may one day pose a risk to the wider financial system and called for “enhanced regulation”. Last Friday, this sentiment was also echoed by US Federal Reserve vice chair Lael Brainard, who said that the sector needs “strong guardrails.”

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