Financial Stability Board Offers Recommendations On Cryptocurrency Rules That Preserve Innovators

Financial Stability Board Offers Recommendations On Cryptocurrency Rules That Preserve Innovators

The Financial Stability Board is the international body that monitors and makes suggestions about global financial systems. It has released a crypto principles framework calling for the implementation of laws that equate to the threats posed by the sector. 

In certain, the FSB suggested that crypto regulations should be comprehensive and uniform across all jurisdictions. But seek to defend innovations in the sector, the agency stated in the framework publicized on October 11. 

At the same duration, the FSB accepted that the laws should focus on building. The sector’s technology borrowing a leaf from the conventional financial enterprise. 

“An effective regulatory framework must ensure that crypto-asset activities are subject to comprehensive regulation, commensurate to the risks they pose while harnessing potential benefits of the technology behind them. Such regulation should ensure equivalent regulatory outcomes where they pose risks similar to those posed by traditional financial activities while addressing novel features of crypto-assets,” the FSB said.

Stablecoin regulations

Elsewhere, the agency suggests regulating stablecoins, especially after the collapse of the Terra (LUNA) ecosystem crash. The framework states that policymakers should ensure stablecoinS issuers back their assets to control failure.

“Reliance on algorithms and arbitrage activities are not effective stabilization mechanisms. Indeed, as the report describes, many existing stablecoins, including Terra/Luna, would not meet the FSB’s high-level recommendations,” FSB added. 

Following the framework’s release, associates of the masses have a chance to share their thoughts by December 15, with FSB noting that the purpose is to gain consistency in regulations. 

Risen pressure to control crypto

Notably, the FSB has accelerated its calls for international crypto regulations by suggesting different jurisdictions collaborate on a working framework. The calls have arrived amid the widespread 2022 crypto market correction. 

As conveyed by Finbold, the FSB stated that the requirement for regulation is due to the unreliability of digital investments. According to the body, cryptocurrencies are an ‘unreliable store of value’ hence the need for ‘robust regulation.’ 

It is worth noting that distinct jurisdictions are revealing drafts to control the sector led by the United States (U.S.) and the European Union. Recently, the EU passed the Markets in Crypto-Assets (MiCA) laws for regulating the crypto space. 

Check Out: The UK Government Passes Digital Documents Bill That Could Lead To The Use Of Blockchain

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