G20 Watchdog says “robust” crypto rules will come in October

The Financial Stability Board (FSB) announced today that they will come up with their own proposal for rules that ensure “robust regulation and supervision” of cryptocurrencies.

The organization, which includes Treasury officials and central bankers from the Group of 20 Economies (G20), said it would report to G20 finance ministers and central bank governors in October, outlining its regulatory and supervisory approaches to stable coins and other cryptocurrencies.

“Crypto-assets, including so-called stablecoins, are evolving rapidly. The recent turmoil in the crypto-asset markets highlights their inherent volatility, structural vulnerabilities and the question of their growing interconnection with the traditional financial system,” the FSB said in a statement.

The organization added that even the failure of a single market player can not only lead to “potentially large losses inflicted on investors and threaten market confidence”, but can also “quickly transfer risks to other parts of the crypto-asset ecosystem.”

Today’s announcement comes in the wake of the dramatic collapse of the Terra ecosystem in May and the ensuing liquidity crisis – and eventually bankruptcy – facing several high-profile mortgage lenders and hedge funds.

In particular, this is also the first time the FSB will propose specific rules for the crypto space – although the organization has followed the industry closely, it has so far refrained from any action.

The crypto community is reacting to the G20 proposal

The news of incoming regulations was met with a mixed response from the crypto community.

“Regulations in the crypto world have always met with skepticism because they violate the basic principles that crypto is free and decentralized,” said Pedro Herrera, a senior blockchain analyst at DappRadar. Decrypt.

According to Herrera, while some people may look at imposing clear rules such as “a springboard for mass acceptance and adoption” for many hardliners in the crypto market, “regulations on how creativity is stifled and freedom are limited”.

“It should be noted that although regulations do not guarantee a market free of fraud, they do create a barrier for many bad players to take advantage of the space,” he said, adding that it was too early to draw conclusions since there were no concrete conclusions. proposals have so far been made by the G20.

Kene Ezeji-Okoye, co-founder of Millicent, the first stablecoin and CBDC project funded by the UK Government’s research and innovation department, agreed that more details about the FSB’s forthcoming proposals were needed.

“While some form of regulation will undoubtedly make the space safer and allow more ‘everyday’ adoption, over-regulation can easily paralyze the industry, so see that the FSB requires” robust “global rules – with no idea what these regulations may be. – is a little worrying, said Ezeji-Okoye Decrypt.

According to him, “the problem with trying to write an all-encompassing crypto rulebook is that once the book is published, the game will have changed significantly.”

Nevertheless, Ezeji-Okoye admits that the events of recent months have clearly shown that stack coins are “one area where extensive regulation is needed.”

“For digital currencies to become mainstream, stack coins must be trusted by the public, and fully fungible with other types of public and private money. The only realistic way this can happen is through shared regulations,” the Millicent chief added.

Meanwhile, Joseph Collement, legal adviser at Bitcoin.com, is far from sure that the FSB rules will have any positive impact on the industry.

“Regulators have been aware since 2018 that companies like Celsius are pseudo-banks without FDIC insurance. Still, they failed to protect consumers. FSB rules come too late and are likely to be of little use to the industry as a whole,” Collement said. Decrypt.

However, some players are positive about the FSB’s features.

“It is encouraging to see more and more decision makers and regulators realize that crypto is here to stay,” said Igneus Terrenus, head of communications at crypto exchange ByBit. Decrypt. “This consensus will ensure the healthy development of the rapidly growing and rapidly changing industry for decades to come.”

Terrenus added that ByBit would like to contribute its knowledge and resources to such efforts.

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