The Financial Stability Board (FSB) has revealed that many stablecoins will not meet the standards stipulated in its recommendations for crypto asset regulations that will be released later this year. The FSB is a global organization that oversees and provides guidance on the stability and resilience of the international financial system. The regulatory effort aligns with an announcement made last year about the FSB’s intentions to set out a timeline for global crypto regulators in 2023. The recommendations aim to curtail the effect of crypto asset implosion on the broader financial system.
A core aspect of the regulatory framework is focused on stablecoins, and the FSB now seeks to strengthen global stablecoin governance frameworks, as such assets have characteristics that could worsen threats to financial stability. The FSB has already concluded that many existing stablecoins would not meet the stipulated “high-level” standards, let alone detailed rules to be set by sectoral bodies.
Upon completion of the work, the FSB will coordinate the regulation of cryptocurrencies on the principle of “same activity, same risk, same regulation.” The FSB also intends to publish a joint paper with the International Monetary Fund (IMF) to synthesize the outcome of policy findings on crypto assets.
The FSB’s regulatory framework is an effort to ensure the stability and resilience of the international financial system. The FSB is aiming to set out a timeline for global crypto regulators in 2023 and the recommendations are meant to protect the broader financial system from the effects of crypto asset implosion. The FSB is also looking to strengthen the governance frameworks of stablecoins, as these assets have the potential to worsen threats to financial stability.
The FSB has already determined that many existing stablecoins would not meet the high-level standards and detailed rules that will be set by sectoral bodies. The FSB will coordinate the regulation of cryptocurrencies on the principle of “same activity, same risk, same regulation” and will also publish a joint paper with the IMF to synthesize the outcome of policy findings on crypto assets.
