Keep tabs on crypto-TradFi connections, G20’s FSB urges global authorities

Authorities should identify and monitor where crypto crosses over to the broader financial system, the G20’s Financial Stability Board (FSB) said on Monday.

FSB gave the advice in its final framework for how crypto and stablecoins should be regulated and supervised. The G20 requested the FSB’s insight on ways to address potential for crypto to impact global financial stability after the Terra and FTX debacles.

The framework does not cover central bank digital currencies (CBDCs), as they fall outside the scope of the current guidelines.

“Same activity, same risk, same regulation” serves as a fundamental principle. The FSB has highlighted the need for crypto and its intermediaries to adhere to regulatory standards applicable to traditional financial instruments and intermediaries.

FSB Secretary General John Schindler reportedly said players in the field “can no longer argue there is a lack of regulatory clarity, as our framework makes clear the standards that should apply.”

To promote transparency and mitigate risks, the recommendations further encourage cross-border cooperation and information-sharing among regulatory authorities. 

They also emphasize the need for crypto issuers to disclose comprehensive governance frameworks, as well as transparent information regarding their operations and risk profiles.

FSB noted it has been working closely with a handful of global financial bodies, including the International Monetary Fund and the World Bank, to “ensure that the work underway regarding the monitoring and regulation of crypto-asset activities and markets is coordinated and mutually supportive.”

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