17-7-2023 (LONDON) The G20’s Financial Stability Board (FSB) has said that crypto firms must introduce basic safeguards to prevent the kind of blow-ups seen at FTX exchange and other crypto casualties. The watchdog published final recommendations on supervising firms that trade cryptoassets such as bitcoin, and revised its existing recommendations for stablecoins in light of the demise of TerraUSD/Luna coins.
The FSB recommends that crypto firms borrow universal guard rails from mainstream finance, focusing on robust governance to avoid conflicts of interest, proper risk management, and disclosures to ensure customer money is segregated from company cash. The FSB also emphasized that the recommendations should be applied by all countries, even those that are not members of the watchdog.
The collapse of FTX in November 2022 highlighted vulnerabilities from crypto firms, and the FSB said that crypto players need to stop operating outside the regulatory perimeter or in non-compliance with existing rules. FSB Secretary General John Schindler urged crypto firms to adhere to the standards set out by the framework.
The FSB’s global baseline minimum standards are designed to accommodate jurisdictions that want to go further. The FSB norms are expected to be made more granular by additional measures from global banking and securities watchdogs Basel Committee and IOSCO. Although the European Union has already approved the world’s first comprehensive set of rules for cryptoasset markets, the FSB’s standards are expected to be adopted globally.
Bitcoin has reached 13-month highs, buoyed by a landmark legal victory for Ripple Labs Inc. on Thursday, which had challenged regulators over how far tokens should come under US securities law. The FSB, whose members commit to applying agreed norms, will review how they are put into place by the end of 2025.
