The Financial Stability Board (FSB) has published a global regulatory framework for crypto-asset activities based on the principle of ‘same activity, same risk, same regulation’.
The events of the past year have highlighted the intrinsic volatility and structural vulnerabilities of crypto-assets and related players. The global standards body is concerned that if linkages to traditional finance were to grow further, spillovers from crypto-asset markets into the broader financial system could increase.
Regulatory authorities across multiple jurisidtions have been recommended to apply nine key objectives, with the objective of establising a global regulatory baseline.
The framework consists of two distinct sets of recommendations for the oversight of crypto-asset activities and markets and the supervision of global stablecoin arrangements. Both sets of recommendations, which were published for consultation in October 2022, have been revised in light of recent blow outs in crypto markets over the past year, with stronger restrictions placed on safeguarding of client assets and the risks associated with conflicts of interest.
Feedback to the initial consultation also identified decentralised finance (DeFi) as an area that needs broader discussion. To this end, the FSB will assess if additional policy work is needed on DeFi and crypto-asset service providers that combine multiple functions by end-2024.