Global stability watchdogs have proposed global cyber-currency rules in response to the recent disruptions in the cryptocurrency market. In total, the Financial Stability Board (FSB) has made nine recommendations, it announced on Tuesday. This includes requiring cryptocurrency companies to hold capital such as banks if they operate similar businesses to financial institutions.
The Financial Stability Board coordinates the development of international standards and financial rules within the G20, the group of the 20 most important industrialized and emerging countries.
So far largely unregulated
In many countries, cryptocurrencies are largely unregulated. In early July, the European Union (EU) was the first major economic region to agree on regulations for cryptocurrencies. Over the course of the market turbulence of recent months, the value of cyber currencies had fallen from about $3 trillion in November 2021 to just about $935 billion (€964 billion). US interest rate hikes and the prospect of tighter regulation had led to price falls. Some crypto companies, such as Voyager Digital, have even had to file for bankruptcy.
Commenting on the proposals, Dutch Deb governor Klaas Knot, chairman of the Financial Stability Board, said the stock market turmoil had strengthened the governing body’s assessment that structural vulnerabilities existed. “This turmoil has once again underlined the need for a comprehensive approach to crypto asset regulation,” he said in a letter to G20 finance ministers and central bank governors.
Regulations like banks
The FSB is proposing to establish a supervisory framework for overseeing and managing crypto firms’ risks and data, as well as drawing up plans for smooth resolution of struggling crypto firms. If such companies do business as banks, they should be regulated as banks. The premise is that the same activities should be regulated in the same way, be it a cryptoasset company, a bank or a payment provider. Crypto firms may also need to clarify some part of their business to ensure this. The proposals aim for internationally uniform regulation of cryptocurrencies.
Public consultations on the proposals will last until 15 December. They should be completed by mid-2023. Then the FSB member states must implement them quickly.
Source: Krone
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
