The Financial Stability Board (FSB), an organization charged with making financial regulatory recommendations to the G20, has released a framework containing metrics that could eventually become binding on crypto assets.
In collaboration with other standard-setting agencies, the FSB has compiled and submitted a report to G20 nations’ financial ministers and central bank governors, in response to the call for global regulations of the booming crypto markets during the March ‘G20’ meeting in Buenos Aires.
Facets of the crypto markets to come under the FSB radar will include crypto assets price volatility, initial coin offerings, crypto assets as securities, use of cryptocurrencies in payments, as well as how virtual currency volatility compares to gold, equities, and other currencies.
According to the report, monitoring the above metrics should help to identify and mitigate risks (posed by crypto assets) to consumer and investor protection, market integrity, and potentially to financial stability.
The agency, however, will not fail to mention that spoofing, wash trading as well as ‘pump and dump’ are features of the current crypto markets that could remarkably affect the accuracy of data to be gathered in the long run. In addition, the FSB mentioned that their proposed metrics could also fail to apply to all crypto assets in the evolving market and therefore, a review at a later stage would reveal which new metrics will be added.
Crypto exchanges will be checked for compliance with ‘laws applicable to exchanges’ since it raises significant concerns, including consumer and investor protection, market integrity and money laundering/terrorist financing.
On the bright side “the FSB believes that crypto-assets do not pose a material risk to global financial stability at this time, but recognizes the need for vigilant monitoring in light of the speed of market developments.”
The Committee on Payments and Market Infrastructures (CPMI), International Organization of Securities Commissions (IOSCO), and the Basel Committee on Banking Supervision (BCBS) are the standard-setting agencies involved in the new crypto watch team.
If approved, data contained in the new report could reportedly go on to become the basis for monitoring crypto assets among the G20 nations and also bring us a step closer to the global regulation of the virtual currency space.
