The Financial Stability Board (FSB) said on Monday (July 11) it would propose “robust” global rules for cryptocurrencies in October,…
A Singapore based cryptocurrency exchange Crypto.com, in May 2021 mistakenly transferred A$10.5 million (US $7.2 million) rather than the expected A$100 (US $68) to a woman.
The Financial Stability Board (FSB) said on Monday (July 11) it would propose “robust” global rules for cryptocurrencies in October, following the recent turmoil in markets that has highlighted the need to regulate this “speculative” sector.
The FSB – a body of regulators, Treasury officials and central bankers from the Group of 20 (G-20) economies – has so far limited itself to monitoring the crypto sector, saying the industry does not seem to pose a systemic risk.
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But the recent turmoil has highlighted the crypto markets’ volatility, structural vulnerabilities and increasing links to the wider financial system.
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“The failure of a market player, in addition to imposing potentially large losses on investors and threatening market confidence arising from crystallisation of conduct risks, can also quickly transmit risks to other parts of the crypto-asset ecosystem,” the FSB said.
The value of Bitcoin – the largest cryptocurrency – has slumped some 70 per cent since its November record of US$69,000 (S$97,000). It was trading at US$20,422 on Monday, leaving many investors nursing losses.
The TerraUSD stablecoin collapsed earlier this year, and withdrawals and transfers from major crypto firms Celsius Network and Voyager Digital have rattled markets.
Stablecoins should be captured by robust regulation if they are to be used as a means of payment, the FSB said.
It said it would report to the G-20 finance ministers and central bank governors in October “on regulatory and supervisory approaches to stablecoins and other crypto assets”.
The FSB has no lawmaking powers, but its members commit to applying its regulatory principles in their own jurisdictions.
The watchdog is lagging the European Union, a leading member of the FSB, which agreed on comprehensive new rules for the crypto market this month.
The FSB has said crypto assets are predominantly used for “speculative purposes” but do not operate in a “regulation-free space” and must comply with relevant existing rules.
Many countries require crypto firms to have anti-money laundering controls.
The FSB said its members “are committed to using the enforcement powers within the legal framework in their jurisdiction to promote compliance and act against violations”.
(The Straits Times/ANN)
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