The crypto market crash asks the FSB to propose global regulations (report)

The Financial Stability Board (FSB) – an organization set up by the G20 countries that oversees the international monetary system – will reportedly propose a regulatory framework focused on digital assets. The bill comes as a result of the recent turmoil in the market and will have a global character.

“Robust” rules to limit the risk for investors

After the last couple of months where the crypto space saw many collapsing projects and investors lost significant sums, the FSB plans to go in and ease the turbulence. According to a coverage from Reuters, the organization will propose “robust” global rules in October that can regulate the “speculative” industry.

Prior to this move, the FSB – which consists of watchdogs, top bankers and officials from the group of 20 economies (G20) – insisted that cryptocurrencies do not pose a systemic risk to investors and have only monitored the niche. However, the recent market volatility and the many failed projects have changed the approach:

“The failure of a market player, in addition to inflicting potentially large losses on investors and threatening market confidence as a result of the crystallization of behavioral risks, can also rapidly transfer risks to other parts of the crypto-asset ecosystem.”

Ever since UST’s crash, stack coins have become a largely controversial topic. In its proposal, the FSB will focus on these cryptocurrencies and explain how they can be used as a payment method:

“The FSB will report to the G20 finance ministers and central bank governors in October on regulatory and supervisory approaches to stack coins and other cryptocurrencies.”

Industry critics often claim that digital assets can take part in criminal activities such as money laundering, drug deals and terrorist financing. On that note, the FSB promised to use its powers and “promote compliance and act against violations.”

The opinion of the FSB leader

Earlier this year, Klaas Knot – chairman of the organization’s board – raised concerns that the digital asset market could have a negative impact on the global monetary network in the future. As such, he argued that imposing “policy work on cryptocurrencies is a priority for the FSB.”

Knot outlined that strict rules should in principle be applied to “unsupported” tokens, stack coins and the DeFi sector. In his view, the FSB is the right entity to formulate a set of rules due to its expertise and affiliation with government entities from the G20 economies:

“Thanks to its broad international and cross-sectoral membership, including the sector standard settler, the FSB is well positioned to take a leading role in designing a coherent framework for cryptocurrencies.”