Friday, July 21, 2023
Noting that guidelines will help ensure consistent, comprehensive and risk-based regulations, FSB representatives affirmed the two-part plan provides guidance on regulating, supervising and overseeing activities and markets of general crypto-assets and global stablecoin (GSC) products.
The FSB further noted that it has collaborated with sectoral standard-setting bodies (SSBs) to develop a workplan for 2023 and beyond to develop risk-based global regulatory guidance that combines SSB activities with public monitoring and reporting.
Nicolas Gilot, co-CEO and founder of Ultra, a PC video gaming ecosystem, commended the FSB on its efforts, stating that while critics may view harsh regulations as a hindrance to blockchain innovation, they are indispensable for fostering increased trust within the industry. "One key advantage of stricter regulations is the improved safeguarding of customer funds," he said. "Separating activities of major crypto conglomerates and enforcing robust record-keeping could mitigate the risks of fraud and mismanagement, thereby boosting investor confidence and encouraging mainstream adoption in all blockchain-based sectors."
The FSB pointed out that crypto-asset recommendations are mainly focused on regulatory, supervisory and oversight issues and do not specifically address all risk categories, such as anti-money laundering/combating the financing of terrorism (AML/CFT); data privacy; cyber security; consumer and investor protection; market integrity; competition policy; taxation; monetary policy; monetary sovereignty; and other macroeconomic concerns.
The proposed framework is a collaborative effort, the FSB noted, thanking the following SSBs for their contributions: the International Monetary Fund, World Bank, Organization for Economic Cooperation and Development, Basel Committee on Banking Supervision, Bank for International Settlements' Committee on Payments and Market Infrastructures, International Organization of Securities Commissions, and Financial Action Task Force.
GSC recommendations are addressed to financial regulatory, supervisory and oversight authorities at a jurisdictional level, the FSB noted, stating that these proposals should be applied by individual authorities.
In addition, the FSB noted that the recommendations are intended to be flexible to enable numerous stakeholders to incorporate them broadly to global stablecoins around the world, including special purpose GSCs.
"Where international sectoral standards apply to a GSC for a particular economic function, those standards will address risks specific to the economic function and, as such, authorities should implement those international standards," the FSB wrote.
Gilot affirmed that standardizing regulations across jurisdictions can level the playing field and promote responsible practices. By preventing regulatory loopholes where companies could exploit lax regulations, he noted, a consistent global framework can foster a more reliable and secure crypto ecosystem. However, he urged regulators to take a balanced approach to ensure that blockchain continues to evolve and adapt. Overly burdensome regulations might stifle the entry of startups, which would impact global blockchain competition, he warned.
"The challenge lies in striking the right balance between regulation and innovation," he said. "While acknowledging the similarities between crypto-assets and traditional financial activities, policymakers must consider the unique aspects of blockchain and decentralized finance. A flexible and tailored approach is vital to enable growth and foster the industry's technological advancements."
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