FSB finalizes its recommendations for global crypto framework

The Financial Stability Board (FSB) – an international organization that oversees the global financial system – has come up with a global regulatory framework for crypto. The recommended guidelines for the world’s 20 leading economies, known as the G20, have been prepared on the principle of “same activity, same risk, same regulation”.

Created a public note and two separate guidance documents public The document includes two sets of recommendations: high-level recommendations for regulating crypto in general and “revised high-level recommendations” for “global stablecoins”. The latter means nothing more than any stablecoin that can be used in more than one jurisdiction.

FSB says crypto platforms must separate clients’ digital assets from their own funds and clearly separate functions to avoid conflicts of interest, with regulators ensuring tighter cross-border cooperation and oversight Will be

The international body has also been quite open about its appreciation of privacy, as it calls on local regulators to ensure that there is no activity that could expose the “responsible entity or affiliated entities”, alluding to the Decentralized Finance (DeFi) protocol. may hinder identification”. One of the high-level recommendations states:

“Authorities must have access to the data as necessary and appropriately to carry out their regulatory, supervisory and inspection mandates.”

For so-called global stablecoins, the FSB emphasizes that any stablecoin issuer must have one or more identifiable and accountable legal entities or individuals that it calls “governance bodies.” It states that issuers must hold a 1:1 minimum ratio of reserve assets, unless the issuer is “subject to substantial prudential requirements” equivalent to commercial bank standards.

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What is new, however, is the potential obligation of “global stablecoin” issuers to obtain some sort of permit to operate in each jurisdiction. The guidelines state:

“Authorities should not allow GSC arrangements to operate in their jurisdictions unless the GSC arrangements meet all regulatory, supervisory and inspection requirements of their jurisdiction, including positive approvals.”

The FSB will review the status of implementing its recommendations worldwide by the end of 2025. In September 2023, along with the International Monetary Fund, it will deliver a joint report on current policy and regulatory issues to the G20.

In early July, the Association for Financial Markets in Europe urged EU lawmakers to include the category of DeFi in the first EU-wide crypto framework, citing the FSB stance.

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