Financial Stability Board lays out plans for crypto, stablecoins
The Financial Stability Board (FSB), an international agency that makes recommendations for the global financial system, published a series of reports and documents on 11 October which made critical statements and high-level recommendations for the crypto industry.
Speaking on the challenges faced while regulating crypto consistently on an international level, the FSB pointed out that the variety in the classification of crypto assets by member nations poses a problem.
The FSB believes that since crypto assets perform similar economic functions as products from traditional finance, they should be subject to similar regulations. “They are grounded in the principle of “same activity, same risk, same regulation,” the watchdog said in its proposal for the international regulation of crypto.
According to the FSB’s consultative document on regulation and oversight of crypto markets, the decentralized nature of crypto projects contributes to the lack of transparency and accountability when things go wrong.
The watchdog has called for crypto assets like stablecoins to be held at high regulatory standards, given their influence on the broader crypto market.
In addition to the lack of good governance, the FSB also questioned the price stability claims made by stablecoin projects, given that some stablecoins depend on other crypto-assets as an “alleged stabilization mechanism.”
An example of this would be TerraUSD’s dependence on Luna for maintaining its peg. This example has been extensively covered in the watchdog’s criticism of the stability mechanisms behind stablecoins
The FSB believes that given its massive popularity, the crypto industry has reached a point where it presents a threat to global financial stability.
The watchdog
Read more on ambcrypto.com
