- FSB is preparing to lay down recommendations for regulating the crypto industry in early 2023.
- The board’s members met in Basel last week to discuss the collapse of the now-bankrupt crypto exchange, FTX.
The Financial Stability Board (FSB), the world’s most powerful global financial watchdog group, is preparing to lay down recommendations for regulating the crypto industry in early 2023.
The collapse of the now-bankrupt crypto exchange, FTX, has triggered regulators from across the globe, with governmental hearings focusing on crypto supervision.
FSB Secretary General Dietrich Domanski, while talking to the Financial Times, said,
“Recent events have reinforced the recognition that it is indeed urgent to address risks.”
Domanski, who has completed his tenure of five years, added,
“Many crypto market participants argue that authorities are hostile to innovation. I would say so far, authorities have been fairly accommodating.”
John Schindler, the Senior Associate Director at the US Federal Reserve Board’s Division of Financial Stability, will take over the position.
The goal of formulating recommendations for regulating the crypto industry is to hold crypto projects to the same standards as banks if they provide similar services.
Regulatory bodies being questioned following Terra and FTX debacles
Major global policymakers have been chastised for letting exchanges such as Terraform Labs and FTX expand to huge levels before their collapse. Rules and standards, according to the Secretary, would have prevented Terra and FTX from failing, as they would not have met the criteria for sound governance.
The Board intends to develop a timeline for global regulators to implement the initial recommendations in the next few months. Following the provision of recommendations, different national and regulatory bodies can enact rules agreed upon at the FSB.
FSB to complete regulations by 2023
In October 2022, the FSB published a report of high-level recommendations on regulating the crypto industry. The regulatory body planned to finalize these by 2023 after a public comment period.
The FSB, made up of G20 central bankers, finance officials, and regulators, met in Basel last week. The most prominent agenda of the meeting was the FTX debacle. The group emphasized the importance of the FSB and standard-setting bodies.
These bodies advance the policy to establish a global framework of regulation and supervision, including in non-FSB member jurisdictions.
