Though the international board can make recommendations to global policymakers, it largely acts as an advisory body with no enforcement authority.
The international monitoring body Financial Stability Board, or FSB, called for a global framework aimed at regulating and supervising crypto in the wake of FTX’s collapse, also saying it would assess vulnerabilities associated with decentralized finance.
In a Dec. 6 meeting in Basel, Switzerland, the FSB said it planned to “enhance its crypto-assets monitoring framework” to include “DeFi-specific vulnerability indicators” as well as address the potential impact of DeFi becoming more closely connected to traditional financial markets. The monitoring body says that crypto market turmoil such as the collapse of FTX currently poses limited risks, that’s increasing given the “growing linkages of crypto-asset firms with core financial markets and institutions.”
“Crypto trading platforms, combining multiple activities that are normally separated in traditional finance, can lead to concentrations of risk, conflicts of interest, and a misuse of client assets,” said the FSB. “The [FSB] emphasised the importance of ongoing vigilance and the urgency of advancing the policy work programme by the FSB and the standard-setting bodies to establish a global framework of regulation and supervision, including in non-FSB member jurisdictions.”
The FSB Plenary met today in Basel. Topics covered included the outlook for financial stability; #cryptoassets and decentralised finance (#DeFi); addressing financial risks from #ClimateChange; and issues affecting #emergingmarkets and developing economieshttps://t.co/Oketd2CSZL pic.twitter.com/ZTnm8oTaia
— The FSB (@FinStbBoard) December 6, 2022
The FSB has previously proposed a comprehensive framework for crypto aimed at addressing potential risks while “harnessing potential benefits of the technology.” Members of the public also have until Dec. 15 to comment on the group’s recommendations regarding stablecoins.
Related: US Treasury recommends lawmakers decide which regulators will oversee crypto spot market
Established at a G20 summit in 2009, the FSB has members representing institutions such as financial regulators, central banks and ministries of finance from more than 20 jurisdictions. Though the board can make recommendations to global policymakers, it largely acts as an advisory body with no enforcement authority.