The Financial Stability Board (FSB) has announced the launch of a proposal that introduces rules that will regulate the cryptocurrency space and supervise the sector. The FSB is an organization that comprises officials from the treasury and central banking officials from the Group of 20 economies (G20).
FSB to launch crypto regulations in October
The FSB said it would release a report to the G20 finance ministers and governors of the G20 central banks about its views of the regulatory and supervisory approach to digital assets, including stablecoins.
In the statement, the FSB said that crypto was a “fast-evolving” asset class. However, it pointed to the market’s recent volatility and vulnerabilities. Moreover, the interaction of traditional financial systems with the crypto space was also concerning.
Your capital is at risk.
The institution further said that if one of the market players in the crypto space collapsed, the effects were felt across the entire sector. This made investors in the space vulnerable to massive losses, and it could threaten their confidence of investors. The risks could also be felt in other areas of the crypto-asset sector.
The announcement by the FSB comes as the crypto market suffers from a prolonged bear market. This bear market has affected some projects in the space that have closed their doors because of a liquidity crisis. Some platforms such as the Voyager exchange and Three Arrows Capital have filed for bankruptcy. The collapse of the Terra Luna ecosystem has also attracted regulatory attention to the crypto ecosystem.
This is the first time the FSB has proposed rules targeting the cryptocurrency sector. While the FSB has been keeping a close eye on the crypto space, it has avoided implementing any action against or supporting it.
Regulations could be good for crypto
Some crypto community members have always looked down upon crypto regulations, arguing that they could stifle innovation. However, others, such as the senior blockchain analyst at DappRadar, Pedro Herrera, believe that regulations could also be viewed as a way to bring in clear rules that will fuel the adoption of crypto assets.
Herrera noted that while regulations did not necessarily mean that fraud would be eradicated from the market, it could hinder bad actors from flocking into the market. He also added that no major proposals had been provided by the G20 economies.
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