Lynn Johannson, Advisor, Sustainability and ESG
January 4th, 2024
Lynn Johannson, President of E2 Management Corporation and Catalyst for THE Collaboration
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A New Era: Financial Stability Board Releases Final Recommendations for Cryptoasset Activities and Markets
Regulation | Aug 2, 2023
The Financial Stability Board (FSB) unveils a comprehensive framework for international consistency in the regulation of cryptoassets, addressing both crypto-asset activities and 'global stablecoin' arrangements.
- The Financial Stability Board (FSB) has released its final recommendations for regulating cryptoassets and related services, marking a significant step towards international regulatory harmony. These guidelines are part of the FSB's ongoing efforts in the categories of Banking, Cross-border, FinTech, and UK.
- The recommendations aim to provide a common base for international regulatory coverage of cryptoassets, a technology that has previously seen inconsistent regulatory development. The FSB's high-level recommendations offer domestic regulators a basic framework for crafting their own regulatory regimes.
See: House Committee Introduces Digital Asset Legislation: The Financial Innovation and Technology for the 21st Century Act
- The guidelines are expected to influence the UK's upcoming proposals for cryptoasset regulation and may also impact the future development of areas not currently covered by the EU's regulatory framework under MiCA.
- The FSB's shared workplan indicates continued engagement in this area, including a joint report with the International Monetary Fund (IMF) later this year.
Recommendations on Crypto-Asset Activities and Markets
- Regulatory Powers and Tools: Authorities must have appropriate powers, tools, and resources.
- General Regulatory Framework: Apply comprehensive regulation consistent with the principle "same activity, same risk, same regulation."
- Cross-Border Cooperation: Foster efficient communication and consistency of regulatory outcomes.
- Governance: Require clear governance frameworks.
- Risk Management: Implement effective risk management frameworks.
- Data Collection: Ensure robust frameworks for data collection, storage, and reporting.
- Disclosures: Mandate clear and transparent information disclosure.
- Addressing Financial Stability Risks: Monitor and address interconnections within the crypto-asset ecosystem.
Revised Recommendations on 'Global Stablecoin' Arrangements:
- Authorities' Readiness: Have appropriate powers, tools, and resources.
- Comprehensive Oversight: Apply consistent regulatory requirements.
- Cross-Border Cooperation: Foster communication and coordination across borders.
- Governance Structures: Require comprehensive governance frameworks.
- Risk Management: Address risks, including operational resilience and cyber security.
- Data Storage: Implement robust frameworks for data storage and access.
- Recovery and Resolution: Require appropriate recovery and resolution plans.
- Redemption Rights: Ensure robust legal claims and timely redemption.
Conclusion
The FSB's final recommendations represent a significant milestone in the global regulation of cryptoassets. By providing a voluntary yet comprehensive framework, the FSB has laid the groundwork for a more consistent and transparent regulatory environment. The impact of these recommendations on domestic and international regulatory landscapes will be closely watched in the coming months, as governments and regulatory bodies work to implement these guidelines into their respective legal frameworks.
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