The unprecedented crypto market turmoil has spurred the Financial Stability Board (FSB) into action. The global financial body will be taking steps towards making recommendations for regulating the crypto industry regulate market early in 2023 and enacting them swiftly to protect investors.
Dietrich Domanski, the outgoing secretary general of the FSB, has pointed out that it's "urgent to address risks" within the crypto space, and that's precisely what the agency's upcoming recommendations will effectively do. It will hold crypto projects "to the same standards as banks."
Citing "strong agreement" among the FSB members about the agency's strategy, Domanski said that it "shows clearly what the way forward (for crypto) regulation looks like."
His argument - if governments had such rules and standards beforehand, it would have prevented black swan events like the collapse of Terraform Labs and FTX exchange, as these entities would have failed the "criteria for sound governance."
Beyond an implementation timetable, The FSB plans to add further details on the areas where policymakers could benefit from "more clarity" before making rules.
Some of these areas are "clarify governance arrangements and ensure transparency," how to "safeguard" client funds to avoid a run on a cryptocurrency, and how to deal with firms where "there is a combination of different activities that are traditionally separate."
Once the agency makes its recommendations, the expectation is that various national authorities include them in their local regulations.
Recognizing that the global adoption of rules is likely to be a slow and time-consuming process, Domanski insists that the work plan should “reflect the urgency."
To drive forward crypto regulations, a group similar to the Basel Committee for Banking Supervision that created Basel bank capital rules for tighter risk management frameworks in the aftermath of the 2007-08 crash might be formed.
______________________________
VASPs need a Travel Rule Solution to comply with the FATF Travel Rule. So, have you zeroed in on it yet? Check out Veriscope, the only frictionless crypto Travel Rule compliance solution.
Visit our website to read more: https://www.shyft.network/veriscope, and contact our team for a discussion: https://www.shyft.network/contact.
Also, follow us on Twitter, LinkedIn, Discord, Telegram, and Medium for up-to-date news from the world of crypto regulations. Also, sign up for our newsletter to keep up-to-date on all things crypto regulations.
