By Hans Bentzien
FRANKFURT (Dow Jones)–The Financial Stability Board (FSB) has issued recommendations for the regulation of cryptoassets and stablecoins for consultation, aimed at strict supervision. The recommendations aim to ensure coherence and completeness of regulatory and supervisory approaches to crypto-asset activities and markets and to strengthen international cooperation, coordination and information sharing.
The recommendations apply to all types of crypto-active activity and related issuers and service providers that may pose a risk to financial stability. At the same time, the FSB has adjusted its recommendations for handling stablecoins. What is new is that they now not only register existing and globally used stablecoins such as Tether, but also stablecoins with “potential” global significance.
Stricter regulation of crypto-assets has already been called for many times. The FSB’s recommendations now also give them official weight. The FSB is a body of the 20 main industrial and emerging countries (G20), whose finance ministers and central bank governors meet on the sidelines of the annual meeting of the International Monetary Fund (IMF) in Washington.
The following recommendations were published and thus made available for consultation:
1. The activities and markets of cryptoassets – including issuers of cryptoassets and service providers – must be monitored according to the principle of “same activity, same risk, same regulation”.
2. Authorities should cooperate at both national and international levels to provide mutual assistance where appropriate and to promote coherence in regulatory and supervisory outcomes.
3. Authorities should, where appropriate, require issuers of cryptoassets and service providers to have and publish a comprehensive governance framework. The control framework should be proportionate to the risk that the activity or market may pose.
4. Authorities should, where appropriate, require cryptoasset providers to have effective risk management in place covering all material risks associated with their operations.
5. Authorities should, where appropriate, require crypto issuers and service providers to have a robust framework for data collection, storage, backup and timely and accurate data reporting, including the necessary relevant policies, procedures and infrastructure.
6. Authorities should require issuers and service providers of crypto-assets to provide users and relevant stakeholders with comprehensive, clear and transparent information about their business, their risk profiles and financial conditions, as well as about the products they offer and their disclosure activities.
7. Authorities should identify and monitor the relevant linkages both within the crypto-asset ecosystem and between the crypto-asset ecosystem and the wider financial system.
8. Authorities should address the risks to financial stability arising from these interconnectedness and interdependencies.
9. Authorities should ensure that crypto-asset providers that combine multiple functions and activities, such as crypto-asset trading platforms, are subject to appropriate regulation, oversight and supervision.
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(END) Dow Jones Newswires
October 11, 2022 04:00 ET (08:00 GMT)