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The Financial Stability Board (FSB) Finalizes Global Regulatory Framework for Crypto-Asset Activities

The Financial Stability Board (FSB) has finalized a global regulatory framework for crypto-assets, ensuring consistent and comprehensive regulation to address risks and promote financial stability.

Key Points

  • The FSB finalizes a global regulatory framework for crypto-assets, aiming for consistent and comprehensive regulation.
  • The framework includes high-level recommendations for crypto-asset activities and revised recommendations for global stablecoins.
  • Built on key principles, the framework ensures consistent regulation, safeguarding client assets, addressing conflicts of interest, and strengthening cross-border cooperation.
  • Collaboration with standard-setting bodies promotes a coordinated approach to monitoring and regulating crypto-asset activities for financial stability.

The Financial Stability Board (FSB) has recently announced the finalization of a global regulatory framework for crypto-asset activities, aiming to establish comprehensive and internationally consistent regulatory and supervisory approaches. The framework, based on the principle of ‘same activity, same risk, same regulation,’ is set to address the risks posed by crypto-assets and stablecoins.

Incorporating Insights and Feedback

The FSB’s framework takes into account insights from the previous year’s events in the crypto-asset markets, as well as feedback received during its public consultation. By doing so, it provides a robust basis for ensuring that crypto-asset activities and stablecoins are subject to consistent and comprehensive regulation that matches the risks associated with them.

The framework consists of two distinct sets of recommendations. The first set includes high-level recommendations for the regulation, supervision, and oversight of crypto-asset activities and markets. The second set comprises revised high-level recommendations for the regulation, supervision, and oversight of “global stablecoin” arrangements.

The final recommendations build on the principles that informed the consultative framework. These principles include ‘same activity, same risk, same regulation,’ high-level and flexible approaches, and technology neutrality. By adhering to these principles, the framework ensures a consistent and adaptable regulatory approach to crypto-assets.

Strengthened Recommendations in Key Areas

The FSB has reinforced both sets of high-level recommendations in three key areas. The first is ensuring adequate safeguarding of client assets, aiming to protect investors and their holdings. The second area addresses the risks associated with conflicts of interest, ensuring that proper measures are put in place to avoid detrimental outcomes. Lastly, the recommendations emphasize the importance of strengthening cross-border cooperation to effectively regulate and supervise crypto-asset activities.

The FSB and standard-setting bodies will continue to coordinate efforts in promoting globally consistent regulation. This includes considering the need for further guidance or standards and monitoring the implementation status at the jurisdictional level. By maintaining coordination, the FSB aims to ensure a harmonized regulatory landscape for crypto-assets across jurisdictions.

It should be noted that the recommendations primarily focus on addressing risks to financial stability and do not comprehensively cover all specific risk categories related to crypto-asset activities. Additionally, the recommendations do not apply to Central Bank Digital Currencies (CBDCs), which are digitalized sovereign money issued by governments.

End Points

The FSB has been closely collaborating with sectoral standard-setting bodies (SSBs) and international organizations to establish a coordinated and complementary approach to monitoring and regulating crypto-asset activities and markets. This collaborative effort ensures that efforts are aligned and mutually supportive.

The global regulatory framework, alongside the shared workplan developed by the FSB and SSBs for 2023 and beyond, marks a significant step in regulating and supervising crypto-asset activities and markets in a comprehensive, consistent, and coordinated manner.