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Given the current volatility in the cryptocurrency market and its growing interconnection with the traditional financial system, the FSB appears to be increasingly worried about the cryptocurrency market.
In October, the Financial Stability Board (FSB), a global financial regulator that is comprised of all G20 nations, will prepare to propose international legislation for cryptocurrencies and stablecoins.
An important step toward crypto regulation was taken today when the Financial Stability Board (FSB) published a statement on the international regulation and supervision of activities involving crypto-assets.
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The watchdog intends to present a report on regulatory and supervisory methods for stablecoins and other crypto assets to the G20 finance minister and central bank governors in October 2022.
The Financial Stability Board intends to have a public consultation report on the evaluation of recommendations ready by that time. The study will include topics such as how gaps may be closed using current frameworks and how high-level proposals can be implemented.
More Measures for Regulating Crypto
In addition to this, the G20 authority intends to produce a second public consultation paper that will make suggestions for establishing global uniformity in regulatory and supervisory approaches to various types of crypto-assets.
According to the Financial Stability Board (FSB), the goal of these collaborative initiatives between the FSB and international organizations that establish standards is to reduce the potential for regulatory arbitrage and fragmentation.
Falling Market Pushed FSB for Regulation
According to the statement, the recent drop in the value of cryptocurrency markets was the main reason for the FSB’s rising interest in the regulation of cryptocurrencies. According to the regulator, the recent market volatility has brought to light an important concern about the growing interconnection of cryptocurrencies and traditional financial systems.
According to the Financial Stability Board (FSB), it has the potential to have an effect on significant aspects of traditional finance, such as short-term funding markets.
The FSB added that global regulators need to supervise cryptocurrency markets in accordance with the principle of the same activity, same risk, and same regulation.
According to the statement made by the FSB, in order for a stablecoin to enter the mainstream of the financial system, it is necessary for it to cooperate with high regulatory and clarity standards, preserve at all times the resources that preserve the stability of value, and fulfil relevant international standards.
Some executives in the sector believe that the FSB’s goal to make proposals for worldwide uniform stablecoin regulation is a very difficult endeavour.
Questions Arise Regarding Regulation Steps
The Chief Executive Officer of the cryptocurrency data provider CoinStats, Narek Gevorgyan, made the point that the Financial Stability Board (FSB) does not have the authority to pass laws but does promise to incorporate crypto-assets into the existing legal frameworks of the countries that are members of the FSB.
In a statement to Cointelegraph, Gevorgyan questioned the ability of the regulator to embrace all regulatory approaches and protocols.
He stated that current legal structures can help control the theoretical parts of the business and centralized exchanges, but what is the initiative for the FSB to merge the hundreds of existing and newly rising protocols that are drastically resistant to regulation by design?
Gevorgyan also questioned the ability of the regulator to embrace all regulatory approaches and protocols.
In February of this year, the Financial Stability Board (FSB) provided an overview of several dangers that might arise from the bitcoin market.
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The authority was particularly concerned about the possibility that certain stablecoins could collapse, the problem of data gaps in the cryptocurrency business, and the possibly dangerous results of the rapid rise of decentralized finance.
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