Following recent market volatility that underlined the necessity for regulation of the speculative crypto sector, the Financial Stability Board (FSB) has announced that it will propose robust global rules for cryptocurrencies in October.
“The FSB will report to the G20 Finance Ministers and Central Bank Governors in October on regulatory and supervisory approaches to stablecoins and other crypto-assets,” the FSB said.
The FSB which is a body of regulators, treasury officials, and central bankers from the Group of 20 economies (G20), has so far limited itself to monitoring the crypto sector, saying it did not pose a systemic risk.
The FSB further claims that the recent instability in the cryptocurrency markets has brought attention to their volatility, structural vulnerabilities, and growing connections to the larger financial system.
“The failure of a market player, in addition to imposing potentially large losses on investors and threatening market confidence arising from crystallization of conduct risks, can also quickly transmit risks to other parts of the crypto-asset ecosystem,” the FSB said.
The financial board believes that if stablecoins are to be accepted as a form of payment, they must be subject to strict regulation.
Although the FSB does not have legislative authority, its members agree to implement its regulatory principles in their own jurisdictions.
The FSB also added that crypto assets are predominantly used for speculative purposes but don’t operate in a regulation-free space and must comply with relevant existing rules.