A statement on the “international regulation and supervision of crypto-asset operations” was made on Monday by the Financial Stability Board (FSB), an international organization that keeps track of and recommends changes regarding the global financial system.
According to the G20 watchdog, it is committed to fostering “international consistency of supervisory and regulatory methodologies among national institutions and foreign standard-setters as they cooperate toward establishing risk-based, technology-neutral policy for the broad spectrum of crypto-assets, firmly rooted in the principle of “same, activity, same risk, same regulation.”
The FSB explained that the recent instability in the cryptocurrency markets “may have spill-over consequences on critical elements of conventional finance, such as short-term funding markets,” adding that crypto assets, like stablecoins, are rapidly changing. The company explained:
“While taking into account the novel characteristics of crypto-assets and utilizing the potential benefits of the technology behind them, an appropriate and efficient regulatory framework must guarantee that crypto-asset activities that pose risks comparable to those of conventional banking activities are subject to the same regulatory outcomes.”
According to the FSB, “both domestically and internationally, crypto-assets and markets must be subject to appropriate regulation and control commensurate to the dangers they entail.
Additionally, according to the financial stability watchdog, cryptocurrency service providers “must always ensure compliance with current legal responsibilities in the areas in which they operate.”
The statement goes on to say:
“Other crypto-assets including StableCoin will be the subject of a report from the FSB to the G20 finance ministers and central bank governors in October, the watchdog said.
The FSB released a report in February that examined the threats that cryptocurrency poses to financial stability.
Due to its size, structural vulnerabilities, and growing interconnection with the existing financial system, the research stated that “Crypto-asset markets are swiftly changing and could reach a stage where they represent a threat to global financial stability.”
As instructed by the executive order signed back in March, the U.S. Treasury Department sent President Joe Biden a crypto framework for global engagement last week.
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