The Financial Stability Board (FSB), an international organization monitoring the global financial system, has developed a global regulatory framework for cryptocurrencies and issued guidelines to the G20 economies. The framework is based on the principle of “same activity, same risk, same regulation.”
The FSB released a public note and two guideline documents on July 17. The guidelines consist of high-level recommendations for regulating cryptocurrencies in general and revised recommendations specifically for global stablecoins, which refer to stablecoins used across multiple jurisdictions.
According to the FSB, crypto platforms should segregate clients’ digital assets from their own funds and establish clear separation of functions to avoid conflicts of interest. Regulators should ensure tight cross-border cooperation and oversight.
The FSB also recognizes the importance of privacy and acknowledges that decentralized finance (DeFi) protocols may make it challenging to identify responsible entities. However, it states that authorities should have access to necessary data to fulfill their regulatory mandates.
Regarding global stablecoins, the FSB emphasizes the need for stablecoin issuers to have identifiable and responsible governance bodies. It recommends that issuers hold reserve assets in a 1:1 minimal proportion, unless they are subject to equivalent prudential requirements as commercial banks. The guidelines also suggest that global stablecoin issuers may be required to obtain permits to operate in each jurisdiction, subject to meeting regulatory requirements.
The FSB plans to review the implementation of its recommendations globally by the end of 2025. In September 2023, it will deliver a joint report with the International Monetary Fund on existing policies and regulatory issues to the G20.
Earlier in July, the Association for Financial Markets in Europe referenced the FSB’s stance and urged European Union lawmakers to include decentralized finance (DeFi) within the first EU-wide crypto framework.
Get $200 Free Bitcoins every hour! No Deposit No Credit Card required. Sign Up