FSB Issues Statement on Regulation and Supervision of Crypto-Assets
The Financial Stability Board (FSB) issued a statement on the international regulation and supervision of crypto-asset activities. The statement highlights the importance of progressing ongoing work of the FSB and the international standard-setting bodies toward addressing the potential financial stability risks posed by crypto-assets, including stablecoins. Additionally, the FSB Plenary, held in Amsterdam, discussed the outlook for global financial stability against the backdrop of Russia’s continuing war against Ukraine as well as the FSB’s planned contributions to the July G20 Finance Ministers and Central Bank Governors meeting in Indonesia.
The statement on crypto-assets notes that crypto-assets and markets must be subject to effective regulation and oversight commensurate to the risks they pose, both at the domestic and international levels. The statement calls for adherence by stablecoins and other crypto-assets, to relevant existing requirements where regulations apply to address the risks these assets pose. The statement also calls on crypto-asset service providers to ensure compliance with existing legal obligations in the jurisdictions in which they operate at all times. FSB will continue to facilitate cross-border and cross-sectoral cooperation among national financial authorities and international standard-setting bodies toward developing a common understanding of the wide spectrum of crypto-assets as well as regulatory and supervisory policies that are risk-based, technology-neutral, and grounded in the principle of “same activity, same risk, same regulation.” The work includes the assessment of existing applicable standards, the identification of potential gaps with a view to inform possible adaptations of existing standards, and the development of new standards or implementing guidance to address new types of risks that may not adequately be captured by the existing regulatory frameworks. FSB plans to submit a report to the G20 Finance Ministers and Central Bank Governors in October on regulatory and supervisory approaches to stablecoins and other crypto-assets.
The FSB Plenary discussed the outlook for financial stability, the financial aspects of commodity markets, and the actions needed to address identified vulnerabilities in the global financial system, in addition to the following topics:
- COVID-19 exit strategies and scarring effect. Plenary highlighted that weaker and more uneven growth and higher inflation exacerbate challenges in supporting a strong, equitable and inclusive recovery from the COVID-19 pandemic. Going forward, FSB plans to publish an interim report on COVID-19 exit strategies and scarring effects in July and then the final report, taking into account feedback from stakeholders, in October.
- Crypto-assets. The Plenary discussed ongoing work on crypto-assets and the way forward, in light of recent developments. This work includes a review of the high-level recommendations on the regulation, supervision, and oversight of “global stablecoin” arrangements and the exploration of regulatory and supervisory implications of “unbacked” crypto-assets. FSB also plans to analyze the financial stability impact of the decentralized finance (DeFi) sector.
- FSB roadmap for addressing climate-related financial risks. The Plenary discussed the encouraging progress that has been made under the FSB Roadmap for addressing climate-related financial risks, which was published in July 2021. The understanding of the financial risks arising from climate change and the policy approaches needed to address them remains at an early stage. The FSB Roadmap aims to support rapid progress in this regard over the coming year (and beyond), including strengthening FSB’s engagement with the private sector.
- Other initiatives. The Plenary also discussed updates on FSB-coordinated roadmap for enhancing cross-border payments and the way forward for achieving greater convergence in cyber-incident reporting. FSB will report to the G20 on both initiatives in October.
Related Links
- Press Release on FSB Statement on Crypto-Assets
- FSB Statement on Crypto-Assets (PDF)
- Press Release on FSB Plenary
Keywords: International, Banking, Securities, Stablecoins, Financial Stability, G20, Covid-19, Decentralized Finance, DeFi, Cyber Incident Reporting, Cyber Risk, Regtech, Climate Change Risk, Crypto-Assets, FSB
Featured Experts
Michael Denton, PhD, PE
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
James Partridge
Credit analytics expert helping clients understand, develop, and implement credit models for origination, monitoring, and regulatory reporting.
Previous Article
BoE and PRA Issue Updates on Prudential and Statistical ReportingRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
