The Financial Stability Board (FSB), an international organisation that analyses and offers recommendations regarding the global financial system, has issued a crypto regulatory framework urging the adoption of legislation proportional to the dangers presented by the industry.
Specifically, the FSB urged that crypto laws should be comprehensive and consistent across all jurisdictions, while protecting advances in the industry, according to a framework the agency released on October 11.
At the same time, the FSB noted that the regulations should emphasise the development of the sector’s technology while drawing from the conventional financial sector.
When properly implemented, a regulatory framework can leverage the advantages of blockchain technology while also ensuring that all crypto-asset operations are subject to comprehensive regulation appropriate to the dangers they bring. This rule should provide identical regulatory outcomes when crypto-assets pose risks comparable to those presented by conventional financial operations, while addressing the unique characteristics of crypto-assets, according to the FSB.
The agency advises regulating stablecoins elsewhere, particularly following the Terra (LUNA) ecosystem catastrophe. The framework specifies that regulators must guarantee stablecoin issuers adequately back their assets in order to avert collapse.
“Algorithms and arbitrage are ineffective stability strategies. According to the analysis, several current stablecoins, including Terra/Luna, do not comply with the FSB’s high-level guidelines,” FSB noted.
Following the framework’s introduction, the public has until December 15 to provide feedback, with the FSB stressing that the goal is to achieve regulatory uniformity.
Notably, the FSB has increased its demands for global crypto laws by asking other governments to agree on a framework. The calls came during the huge crypto market downturn of 2022.
According to Finbold, the FSB has said that regulation is necessary owing to the unreliability of digital assets. According to the organization, cryptocurrencies are an “unreliable store of wealth,” which need “rigorous regulation.”
Notable is the fact that several jurisdictions, headed by the United States and the European Union, are revealing proposals to regulate the industry. The EU has enacted the Markets in Crypto-Assets (MiCA) regulations to manage the crypto industry.
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