The Financial Stability Board (FSB) has introduced 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 underscored the inherent volatility and structural vulnerabilities within the crypto-asset ecosystem and its participants. The global standards body has expressed concern that any further integration with traditional finance may heighten the risk of spillovers from crypto-asset markets into the wider financial system.
Regulatory authorities in various jurisdictions are encouraged to adopt nine key objectives aimed at establishing a global regulatory baseline.
The framework includes two distinct sets of recommendations: one focusing on the oversight of crypto-asset activities and markets, and the other on the supervision of global stablecoin arrangements. These recommendations, initially published for consultation in October 2022, have been updated in response to recent disruptions in the crypto markets, introducing stricter measures for the safeguarding of client assets and addressing conflicts of interest.
Feedback from the initial consultation highlighted a need for further discussion around decentralized finance (DeFi). Consequently, the FSB will evaluate whether additional policy development is required for DeFi and crypto-asset service providers that offer multiple functions by the end of 2024.