G20 regulatory board to propose crypto regulatory guidelines in October
According to a report released today, the Financial Stability Board (FSB) said it would develop its own set of regulations to ensure “robust regulation and supervision” of cryptocurrencies.
The Financial Stability Board is a global financial regulatory board that includes members from the G20 economies.
The FSB organization, which consists of state treasury officials and central bank governors from the respective nations of the Group of 20 economies (G20), made an announcement today that it will propose its regulatory and supervisory approaches to stablecoins and other crypto assets in a report to the G20 finance ministers and central bank governors in October.
It is no news that crypto assets, such as so-called stablecoins, are developing quickly and therefore drawing a lot of attention.
According to a statement from the FSB, the recent downturn in the markets for crypto assets “highlights the inherent volatility, structural vulnerabilities, and the issue of their increasing interconnectedness with the traditional financial system.”
The global regulatory organization, FSB, further buttressed the fact that the failure of a single market participant can not only result in “potentially large losses on investors and threaten market confidence,” but can also “quickly transmit risks to other parts of the crypto-asset ecosystem.”
The announcement by the FSB regarding the proposal of a report on stablecoin regulations and guidelines is a result of the dramatic collapse seen in the Terra ecosystem in May, which caused a lot of negative traction for the cryptocurrency ecosystem and stablecoins, as well as the ensuing liquidity crisis—and, eventually, bankruptcy—that several high-profile crypto lending firms and hedge funds have recently experienced.
It is important to note that this is also the first time the FSB has proposed specific regulatory rules for the crypto space—despite closely monitoring the industry, the organization has so far refrained from taking any action.
The Crypto Community reacts to the FSB proposal
The reaction of the crypto community to the news of impending regulations from the FSB was conflicted.
According to Pedro Herrera, a senior blockchain analyst at DappRadar, “Regulations in the cryptocurrency world have always met skepticism because they are at odds with the fundamental principles of crypto being free and decentralized.”
While some crypto frontier may see establishing clear regulations and guidelines in the crypto space as “a stepping stone to mass acceptance and adoption,” However, Herrera claims that many crypto core frontiers believe regulations are the major cause of creativity being stifled and freedom being restricted in sectors with regulatory laws.
Although regulations do not ensure a market free from fraud, they do, however, create a barrier to prevent many bad actors from exploiting the space, he said, also adding that it is still too early to draw any firm conclusions from the G20 crypto regulation report because the G20 has not yet made any specific proposals.
More information about the upcoming FSB proposal is required, according to Kene Ezeji-Okoye, co-founder of Millicent, the first stablecoin and CBDC project to receive funding from the UK government’s Research and Innovation Department.
It is somewhat alarming to see the FSB calling for “robust” global rules without any idea of what those rules might be, even though some degree of regulation will undoubtedly make the space safer and enable more “everyday” adoption, Ezeji-Okoye revealed in a report.
The issue with attempting to write an exhaustive cryptography rulebook, in his opinion, is that by the time the book is published, the game will have significantly changed.
But Ezeji-Okoye acknowledges that recent developments have shown that stablecoins are “one area where comprehensive regulation is needed.”
Stablecoins must be fully fungible with other forms of public and private money in order for them to be accepted by the general public and for digital currencies to become widely used. The Millicent CEO continued, “The only realistic way for that to happen is via a shared regulatory framework.
In the meantime, Joseph Collement, legal counsel for Bitcoin.com, is not at all optimistic about the potential benefits of the FSB regulations for the sector.
“Regulators are aware that businesses like Celsius are phony banks without FDIC insurance since 2018. But they didn’t manage to safeguard customers. FSB regulations are too late to be helpful to the industry as a whole, according to Collement, who revealed in a report..
However, some players view the FSB’s action favorably.
Igneus Terrenus, the head of communications at cryptocurrency exchange ByBit, said in a report that it is encouraging to see more and more policymakers and regulators acknowledge that crypto is here to stay. This emerging consensus will guarantee the industry’s healthy growth and rapid change for many years to come.
Terrenus continued by saying that ByBit would be happy to lend its expertise and resources to such projects.
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