Financial Stability Board Finalizes Global Crypto Asset Regulatory Framework

The Financial Stability Board (FSB) has finalized a global regulatory framework for crypto-asset activities, aiming to promote comprehensive and internationally consistent regulatory and supervisory approaches. The announcement was made on July 17, 2023, and the framework is based on the principle of 'same activity, same risk, same regulation.'

The FSB's framework incorporates insights from the past year's events in crypto-asset markets and feedback received during the FSB’s public consultation. It provides a robust basis for ensuring that crypto-asset activities and so-called stablecoins are subject to consistent and comprehensive regulation, commensurate to the risks they pose.

The framework consists of two distinct sets of recommendations. The first set includes high-level recommendations for the regulation, supervision, and oversight of crypto-asset activities and markets. The second set comprises revised high-level recommendations for the regulation, supervision, and oversight of "global stablecoin" arrangements.

The final recommendations draw on the implementation experiences of jurisdictions and build on the principles that informed the consultative framework. These principles include 'same activity, same risk, same regulation'; high-level and flexible; and technology neutral.

The FSB has strengthened both sets of high-level recommendations in three areas: ensuring adequate safeguarding of client assets, addressing risks associated with conflicts of interest, and strengthening cross-border cooperation.

The FSB and standard-setting bodies will continue to coordinate in promoting globally consistent regulation by considering the need for further guidance or standards and monitoring implementation status at the jurisdictional level.

The recommendations focus on addressing risks to financial stability and do not comprehensively cover all specific risk categories related to crypto-asset activities. Central Bank Digital Currencies (CBDCs), envisaged as digitalized central bank liabilities, are not subject to these recommendations.

The FSB has been collaborating closely with sectoral standard-setting bodies (SSBs) and international organizations to ensure a coordinated, mutually supportive, and complementary approach to monitoring and regulating crypto-asset activities and markets.

This global framework includes a shared workplan that the FSB and SSBs have developed for 2023 and beyond.

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