Financial Stability Board proposes crypto regulations that protect innovations
The Financial Stability Board (FSB), the international body that oversees and makes recommendations on the global financial system, has released a crypto regulatory framework that requires the passage of legislation that balances the risks to the sector. Specifically, the FSB advised that crypto regulations should be comprehensive and consistent across jurisdictions, but aim to protect innovation in the industry, the agency said in the framework released Oct 11. At the same time, the FSB recognized that legislation should focus on building the sector’s technology while borrowing a leaf from the traditional financial industry.
Somewhere, the agency recommends regulating stablecoins, particularly after the collapse of the Terra (LUNA) ecosystem. The framework states that lawmakers must fully ensure that stablecoin issuers repay their assets to avoid defaults.
Following the introduction of the framework, members of the public will have until December 15 to express their views and the FSB noted that the aim is to achieve uniform rules.
Increased pressure to regulate crypto
Notably, the FSB has accelerated its calls for global crypto regulation by asking different jurisdictions to work together on a framework. The calls came amid widespread crypto market correction in 2022. As reported by Finbold, the FSB found that the need for regulation stemmed from the unreliability of digital assets.
According to the agency, cryptocurrencies are an “unreliable store of value,” hence the need for “robust regulation”.
It is worth noting that various jurisdictions are presenting drafts to regulate the sector, led by the United States and the European Union. Recently, the EU passed the Crypto Asset Markets (MiCA) laws to govern the crypto space.