On July 17, 2023, G20’s Financial Stability Board (FSB), an international platform, announced regulations for crypto-asset activities. As per the announcement, the regulatory framework aims to ensure “comprehensiveness and international consistency of regulatory and supervisory approaches,” towards cryptos.
According to Rahul Pagidipati, CEO, ZebPay, a cryptocurrency exchange, these recommendations are intended to be flexible with the objective that regulations in a jurisdiction takes them into account and customises the same with its frameworks. “Overall, we believe that these recommendations are beneficial for crypto industry in long-run,” Pagidipati included.
From what it’s understood, the regulatory framework includes two kinds of recommendations, namely: “High-level recommendations for the regulation, supervision and oversight of crypto-asset activities and markets (CA recommendations)” and “Revised high-level recommendations for the regulation, supervision, and oversight of “global stablecoin” arrangements (GSC recommendations).” Going by the regulatory framework, it aims to address financial stability-based concerns, and that it doesn’t take into account all crypto asset-related risk factors.
“I think the FSB emphasises the importance of cross-border cooperation to combat regulatory arbitrage, urging information sharing to ensure compliance across jurisdictions, particularly those lacking international standards. This can prevent money laundering and ensure global compliance,” Edul Patel, co-founder and CEO, Mudrex, a crypto-investing application, stated.
With regard to central bank digital currencies (CBDCs), the document stated that they “are not subject to these recommendations.” “In addition, these recommendations, constituting a regulatory and supervisory framework for crypto-assets and stablecoins, will provide input to a joint paper with the International Monetary Fund (IMF) to be delivered to the G20 in September 2023, which will support a coordinated and comprehensive policy approach to crypto-assets by synthesising the policy findings from IMF work on macroeconomic and monetary issues and FSB work on supervisory and regulatory issues,” the document added.
Furthermore, insights from the framework highlighted that FSB and sectoral standard-setting bodies (SSBs) have created “a shared workplan for 2023 and beyond.” “The FSB has been working closely with the Basel Committee on Banking Supervision (BCBS), Bank for International Settlements’ Committee on Payments and Market Infrastructures (CPMI), International Organization of Securities Commissions (IOSCO), Financial Action Task Force (FATF), IMF, World Bank, and Organization for Economic Cooperation and Development (OECD) to ensure that the work underway regarding the monitoring and regulation of crypto-asset activities and markets is coordinated, mutually supportive, and complementary,” the document noted.
“We hope for implementation of policies that not only address risks but also enable us to unlock potential of this technology. In this spirit, we anticipate the paper by FSB and IMF, slated for release in September. We hope that the industry’s perspectives are reflected in the paper,” Sumit Gupta, co-founder and CEO, CoinDCX, a crypto investment application, concluded.