December 11, 2023

The Financial Stability Board (FSB) has released its finalized global regulatory framework for crypto assets.

On Monday, the Financial Stability Board (FSB) published Its proposals for a global regulatory framework for crypto assets to “promote comprehensiveness and international consistency in regulatory approaches”.

The FSB’s framework is based on the principle of “same activity, same risk, same regulation”

The FSB is an international organization that oversees the global financial system. The organization published a global approach guide for crypto-related activities.

The G20 tasked the committee with coordinating the provision of an effective regulatory, supervisory and supervisory framework for crypto-assets in light of recent events in the digital asset industry.

The G20 previously stated in a document summarizing the outcomes of meetings with finance ministers and central bank governors that the Financial Stability Board, the International Monetary Fund and the Bank for International Settlements will submit documents and recommendations to establish a standard crypto regulatory framework for the global financial system.

The FSB’s paper contains two sets of recommendations: Advanced advice for cryptocurrency regulation In general,”Revised high-level recommendations” for “global stable currency”.

FSB respects privacy

According to the FSB’s proposal, cryptocurrency platforms must separate customers’ digital assets from their own funds and must clearly distinguish their functions to avoid conflicts of interest. Regulators have a responsibility to ensure close cross-border cooperation and oversight.

Despite stricter regulatory measures, the FSB respects the principles of privacy. The international body asked local regulators to ensure there was no activity that “could prevent the identification of responsible entities or affiliated entities”. The regulator referred to DeFi protocols in its privacy advice, stating:

Authorities should access data where necessary and appropriate to fulfill their regulatory, supervisory and supervisory responsibilities.

FSB requires stablecoin issuers to have at least one “governance body”

In its guidelines, the FSB discusses a cross-jurisdictional Global Stablecoin Arrangement (GSC) to address its potential risks at both domestic and international levels, while supporting responsible innovation and providing jurisdictions with sufficient room to implement domestic approaches. flexibility.

The committee requires that any stablecoin issuer must have one or more identifiable and accountable individuals or legal entities, which it calls a “governance body.” It further requires issuers to maintain a minimum reserve asset ratio of 1:1 unless the issuer “complies with adequate prudential requirements equivalent to commercial banking standards”.

The FSB also obliged issuers of “global stablecoins” to obtain a license to operate in each jurisdiction. The guidelines state:

Authorities should not allow a GSC arrangement to operate within their jurisdiction unless the GSC arrangement complies with all regulatory, supervisory and supervisory requirements, including affirmative approval, of their jurisdiction.

Implementation of the review recommendations by the end of 2025

The guidance issued by the FSB forms the first part of a global cryptocurrency framework, with further guidance to be provided by the International Monetary Fund and the Bank for International Settlements.

The FSB and IMF will jointly submit “a comprehensive paper integrating macroeconomic and regulatory perspectives on cryptoassets” in September 2023.

The IMF will also independently report on the “potential macro-financial implications of widespread adoption” of CBDCs. In parallel, the BIS will provide a report on analytical and conceptual issues and possible risk mitigation strategies related to crypto-assets.

The FSB said it would review the global implementation of its recommendations by the end of 2025.

Disclaimer: This article is for informational purposes only. It does not provide or be intended to be used as legal, tax, investment, financial or other advice.