FSB Highlights Crypto-Asset Vulnerabilities for the Global Financial System | Sheppard Mullin Richter & Hampton LLP

On July 11, the Financial Stability Board (FSB) published a letter sent to G20 Finance Ministers and Central Bank Governors outlining concerns over the rapid growth of crypto-assets and the vulnerabilities facing the global financial system. The letter pointed out the following:

  • Crypto-assets, including so-called stablecoins, are changing rapidly.
  • Crypto-assets and markets must be subject to effective regulation and supervision commensurate with the risks they present, both nationally and internationally.
  • Providers of crypto-asset services must at all times guarantee compliance with the legal obligations in force in the jurisdictions in which they operate.
  • Recent turmoil in crypto-asset markets underscores the importance of advancing the ongoing work of the FSB and international standards bodies to address the potential risks to financial stability posed by crypto-assets, including coins. say stable.
  • Stablecoins must be backed by strong regulations and oversight from relevant authorities if they are to be adopted as a widely used means of payment or play an important role in the financial system.
  • FSB members support the full and timely implementation of existing international standards.
  • The FSB works to ensure that crypto-assets are subject to strong regulation and oversight.

FSB to report to G20 finance ministers and central bank governors in October on regulatory and oversight approaches to stablecoins and other cryptoassets

put into practice: This latest letter from the FSB attempts to make it clear that crypto is now mainstream and that regulators need to take urgent action to address potential risks in other areas of the global economy. A recent congressional review highlights a similar need for an effective U.S. regulatory framework to ensure that crypto-asset activities that present similar risks to traditional financial activities are subject to the same regulatory outcomes (we have discussed these reviews in previous reviews). previous blog posts here and here).

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Don F. Davis