FSB published a report that focuses on the regulatory and supervisory issues associated with crypto-assets. The report, which is intended for G20 finance ministers and central bank governors, offers an update on the work of BCBS, CPMI, IOSCO, the Financial Action Task Force (FATF), FSB, and the Organization for Economic Co-operation and Development (OECD). The report notes that gaps may arise from the absence of international standards or recommendations and in cases where such assets are outside the perimeter of regulators. The report concludes with a recommendation that the G20 keep the topic of regulatory approaches and potential gaps, including the question of whether more coordination is needed, under review.
The FSB report highlights that international organizations are monitoring and analyzing developments, setting supervisory expectations for firms, and clarifying how international standards apply to crypto-assets. However, assessing the significance of potential gaps is challenging, given the rapidly evolving nature of the crypto-asset ecosystem and related risks. It is suggested that a forward-looking approach to monitoring crypto-assets can help provide a basis for identifying potential gaps and areas that should be prioritized or focused on. The work of FSB has focused on monitoring risks to financial stability and preparing a directory of regulators on crypto-assets, which was published April 2019. The FSB assessment concluded that crypto-assets do not currently pose material risks to global financial stability, but that they do raise a number of further policy issues beyond financial stability. Moreover, FSB concluded that vigilant monitoring remains warranted, as a variety of new products and services seem to be under development. To this end, a further monitoring note will be submitted to its Standing Committee on Assessment of Vulnerabilities (SCAV) in September 2019, including developments in stablecoins and tokenization.
Additionally, the BCBS initiatives on crypto-assets include developing high-level supervisory expectations for banks engaged in crypto-asset activities, monitoring developments related to crypto-assets, and quantifying banks’ crypto-assets exposure. The Basel Committee is collecting data on banks’ direct and indirect exposures to crypto-assets as part of its end-2018 Basel III monitoring exercise. BCBS will discuss the results of this data collection exercise at its meeting in October 2019 and the results will inform the monitoring work of FSB. BCBS is also considering whether to formally clarify the prudential treatment of crypto-assets across the set of risk categories such as credit risk, counterparty credit risk, market risk, and liquidity risk.
Another international standard-setter IOSCO had, in May 2018, agreed to develop an initial coin offering (ICO) support framework to assist members in dealing with the ICO-related regulatory risks. IOSCO is also examining issues and risks associated with the trading of crypto-assets on crypto-asset trading platforms and aims to publish a final report on this by the end of 2019. In addition, IOSCO´s policy committee on accounting is engaging with the International Financial Reporting Interpretations Committee and IASB and has encouraged the development of an appropriate accounting standard for crypto-assets.
Keywords: International, Securities, Banking, Accounting, Crypto-Assets, Financial Stability, Prudential Treatment, Regulatory Gap, FSB
Previous ArticleECB Updates AnaCredit Reporting Manual in May 2019
BIS Innovation Hub published the work program for 2021, with focus on suptech and regtech, next-generation financial market infrastructure, central bank digital currencies, open finance, green finance, and cyber security.
In an article published by SRB, Mairead McGuinness, the European Commissioner for Financial Services, Financial Stability, and Capital Markets Union, discussed the progress and next steps toward completion of the Banking Union.
EBA finalized the two sets of draft regulatory technical standards on the identification of material risk-takers and on the classes of instruments used for remuneration under the Investment Firms Directive (IFD).
EC published, in the Official Journal of the European Union, a notification that the European Court of Auditors (ECA) has published a special report on resolution planning in the Single Resolution Mechanism.
BoE published a scenario against which it will be stress testing banks in 2021, in addition to setting out the key elements of the 2021 stress test, guidance on the 2021 stress test, and the variable paths for the 2021 stress test.
PRA published a consultation paper (CP3/21) proposes rules regarding the timing of identity verification required for eligibility of depositor protection under the Financial Services Compensation Scheme (FSCS).
FSB published the work program for 2021, which reflects a strategic shift in priorities in the COVID-19 environment.
FCA announced that 50% firms have started using the new data collection platform RegData, which is slated to replace the existing platform known Gabriel.
Bundesbank published Version 5.0 of the derivation rules for completeness check at the form level, with respect to the data quality of the European harmonized reporting system.
FED finalized a rule that updates capital planning requirements to reflect the new framework from 2019 that sorts large banks into categories, with requirements that are tailored to the risks of each category.