- FSB introduces a global regulatory framework for crypto-asset activities.
- Framework strengthens client assets safeguarding and cross-border cooperation.
- Central Bank Digital Currencies (CBDCs) are excluded from these recommendations.
In a defining move, the Financial Stability Board (FSB) has released its much-anticipated global regulatory framework for crypto-asset activities. This new framework arises from the essential learnings gained over the past year from volatile crypto-asset markets and valuable feedback collected during the FSB’s public consultation.
Moreover, this framework hinges on the ‘same activity, same risk, same regulation’ principle. It provides a sturdy foundation for comprehensive, consistent regulation of crypto activities and stablecoins proportional to their risks.
As per sources, crypto-assets inherent volatility and structural weaknesses have been underlined in the past year. Events have proven that the collapse of a significant crypto-asset service provider can quickly spread risks throughout the ecosystem.
As a result, the FSB’s framework seeks to control these risks and prevent potential spillovers into the broader financial landscape. Additionally, the FSB’s innovative framework includes two distinct sets of recommendations.
First, there are high-level suggestions for regulating, supervising, and overseeing crypto-asset activities and markets. Besides, there are revised guidelines for managing and controlling “global stablecoin” arrangements.
Consequently, these final recommendations have absorbed insights from jurisdictions’ implementation experiences. Significantly, they adhere to equality, flexibility, and technology neutrality principles that guided the original consultative framework.
However, the FSB has bolstered its high-level recommendations in three key areas:
- Ensuring adequate safeguarding of client assets
- Tackling conflicts of interest risks
- Fortifying cross-border cooperation
Moreover, the framework underscores financial stability risks but does not encompass all specific risk categories related to crypto-asset activities. Notably, Central Bank Digital Currencies (CBDCs) are excluded from these recommendations.
The FSB and its global counterparts have collaborated to ensure a harmonious, mutually beneficial, and comprehensive approach to regulating crypto-asset activities. The global framework includes a shared plan for 2023 and beyond, developed by the FSB and the standard-setting bodies (SSBs).
In addition, they will continue to guide the development of an all-encompassing and coherent global regulatory framework, provide detailed guidance, monitor and publicly report progress.
In conclusion, the FSB’s global regulatory framework is a significant step towards international consistency of regulatory and supervisory approaches. As we move forward, this development paves the way for a safer and more transparent crypto-asset landscape.