On Monday, The Financial Stability Board (FSB) announces now global rules for cryptocurrencies and will report to the G20 Central Banks and Finance Ministers in October on regulatory and supervisory approaches to stablecoins and further crypto assets.
Recent market turmoil was cited by the group of regulators, government officials, and central bankers as evidence of a risk to financial stability, emphasizing 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 FSB statement specifically included "so-called" stablecoins, which have been on the agenda for numerous financial regulators since before the Terra meltdown in May.
The FSB is a Swiss-based multinational organization that manages and supports worldwide financial stability. Its members include national authorities and central banks from 24 countries, including the United States, Russia, and China, and it works with another 70.
While it is stressing current market difficulties as a reason to act, the FSB has been looking into cryptocurrency for some time. It produced a paper in February examining the dangers posed by crypto assets, saying that their scale, structural weaknesses, and rising interconnection with the traditional financial system might jeopardize global financial stability.
The FSB's position is consistent with recent remarks from senior finance officials and committees. The Bank of England's Financial Policy Committee cautioned on July 5 that crypto assets might one day represent a risk to the larger financial system and asked for "increased regulation." This attitude was mirrored last Friday by US Federal Reserve vice-chair Lael Brainard, who stated that the industry needs "tight guardrails."
