FSB published global crypto regulation recommendations for G20 countries.
A comprehensive international regulatory structure for cryptocurrencies has been finalized by the Financial Stability Board (FSB), the international organization that keeps an eye on the global financial landscape.
The recommendations presented by the FSB, crafted with the ethos of “same activity, same risk, same regulation,” are intended to guide the world's 20 most powerful economies, collectively known as the G20.
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On July 17th, the FSB published a public note and two separate documents outlining their guidelines. FSB's advice splits into two distinct areas: general high-level recommendations for cryptocurrency regulation and revised proposals tailored to the "global stablecoin."
In their recommendations, the FSB asserts that digital assets held by crypto platforms on behalf of clients should be kept separate from the platforms' own holdings. They further insist on a distinct separation of functions to prevent potential conflicts of interest. Regulators are urged to facilitate efficient cross-border collaboration and oversight to maintain the stability of the crypto sector.
Interestingly, the FSB’s guidelines strongly uphold the importance of privacy. Local regulators are urged to ensure no activity could potentially obscure the identification of responsible parties, referring to decentralized finance (DeFi) protocols. One of the general high-level recommendations suggests:
Authorities should have access to the data as necessary and appropriate to fulfill their regulatory, supervisory, and oversight mandates.
Regarding global stablecoins, the FSB stresses that stablecoin issuers should designate an accountable legal entity or individual, termed a “governance body.” The guidelines suggest that issuers should match reserve assets to the stablecoin supply on a 1:1 basis.
A significant addition to these guidelines is the potential necessity for "global stablecoin" issuers to secure a license for each jurisdiction they operate in. This is highlighted in the guidelines as follows:
Authorities should not permit the operation of a GSC arrangement in their jurisdiction unless the GSC arrangement meets all of their jurisdiction’s regulatory, supervisory, and oversight requirements, including affirmative approval.
By 2025, the FSB intends to review the implementation of its recommendations around the globe. In collaboration with the International Monetary Fund, a report outlining current policies and regulatory challenges will be presented to the G20 in September 2023.
The FSB's new guidelines aim to provide a solid foundation for the global regulation of the crypto sector, advocating for a fair and transparent operational environment.
It is worth noting that the news about the Financial Stability Board's plans to create crypto regulatory guidelines first broke in February.
