| The latest news is out of Basel, Switzerland. The Financial Stability Board (FSB) is a coordinator of national financial authorities and international standard-setting bodies. The mandate of the agency’s predecessor, the Financial Stability Forum, was broadened following the financial crisis of 2007-2009, leading to the establishment of the FSB. With the goal of preventing financial crises, the group reports to the G20. It has no lawmaking powers. Instead, its members commit to applying its regulatory principles in their own jurisdictions.
This statement from the FSB noted that the failure of crypto market players would threaten not only investors but could send systemic shockwaves through the crypto asset landscape, as well as the traditional financial system. The FSB said that proposals for “robust” rules for cryptocurrencies would be forthcoming this October. Last week the association that represents the primary securities and futures regulators, the International Organization of Securities Commissions (IOSCO), issued its roadmap for crypto-assets. The organization plans to set up two working groups that will issue recommendations around market integrity and investor protection as well as guidance for a regulatory framework for both DeFi and crypto-assets. The DeFi group will be headed by the U.S. Securities and Exchange Commission, while the U.K Financial Conduct Authority will chair the crypto group.
The Treasury Department also issued a statement last week regarding President Biden’s executive order on crypto regulation. The report stated that global cooperation was needed in order for the United States to combat illicit digital asset transactions and that the country needed to be a “leader in the discussion on CBDCs and digital payment architectures.”
There is regulation ahead, no doubt. Is that a bad thing? Enhanced oversight could reduce uncertainty around the asset class and drive enhanced investment and adoption.
Regulation may not be the worst thing for crypto-assets—but only if regulators can align their rules so that the innovations that allowed the industry to flourish can continue. | 