Financial Stability Board (FSB) Chairman Klaas Knot, in a Feb. 20 letter to G20 finance ministers and central bankers, outlined how the organization plans to address major threats to financial stability this year. Cryptocurrencies and decentralized finance (DeFi) were high on the list of challenges the FSB was facing. The G20 Ministers and Bankers will meet on February 24-25 in Bangalore, India.
The FSB has an “ambitious work program” to finalize the regulatory framework for crypto assets in 2023, Uzel said. The FSB is an advisory body established by the G20 and affiliated with the Bank for International Settlements (BIS). It has no enforcement powers.
The FSB indicated in a Feb. 16 report that it is paying more attention to DeFi in light of its potential links to traditional finance. Now, according to Knot, the recommendations in the new framework may not bode well for some stablecoins:
“Importantly, the work of the FSB concludes that many existing stablecoins currently do not comply with these high-level recommendations, as well as international standards and additional, more detailed recommendations of the BIS Committee on Payments and Market Infrastructure – the International Organization of Securities Commissions “.
The guidance issued by BIS and the International Organization of Securities Commissions in July extends the “same risk, same regulation” principles for financial market infrastructures to stablecoins. These principles were promulgated in 2012 in response to the 2008 financial crisis.
The FSB presents an overview of future global standards for stablecoins. Key takeaways:
Stablecoins and other crypto assets are in the focus of the Financial Stability Board (FSB).
The chairman of the FSB said that the numerous stablecoins that are currently being used do not meet international standards … pic.twitter.com/EG4UM1fyhN
— Web3 Daily (@web3_247) February 20, 2023
After the FSB published its final recommendations in July on regulatory and supervisory approaches to crypto assets and stablecoins, the council will make recommendations to specific standards-setting bodies and monitor their implementation.
Financial Stability Board Seeks To Eliminate Cryptocurrency Risks After FTX Crash
Knot wrote: “Appropriate regulation of cryptoassets, based on the principle of ‘same activity, same risk, same regulation’, will start a solid foundation for exploiting the potential benefits associated with this form of financial innovation while containing its risks. “.
The letter noted that one of the drivers for the growth of crypto assets was “dissatisfaction with the existing system of cross-border payments.” He added that the FSB will present a report on the next steps under the G20 roadmap to expand cross-border payments at an upcoming meeting.
Credit : cointelegraph.com
