The crypto industry grew in isolation. While it emerged as an entity free from the shackles of centralized government systems, it turned heads. The sector has witnessed several bear markets in the past. However, regulators are paying special heed this time. This is because crypto wasn’t as mainstream as it is today. It looks like the bears weren’t just pushing these assets’ prices but also driving regulators to hasten their regulatory process. The Financial Stability Board’s [FSB] latest move proves the abovementioned point.
Earlier today, the FSB revealed that it would soon propose a report governing crypto assets to the G20 Finance Ministers and Central Bank Governors. The statement noted that it intends to submit the report by October.
The FSB pointed out the “recent turmoil” in the market. The regulator emphasized the loss that follows suit despite its interconnectedness with the traditional financial system. Elaborating on the importance of a regulatory framework, FSB wrote,
“An effective regulatory framework must ensure that crypto-asset activities posing risks similar to traditional financial activities are subject to the same regulatory outcomes while taking account of novel features of crypto-assets and harnessing potential benefits of the technology behind them.”
The FSB is one of the largest international bodies, with officials from over 24 jurisdictions. Based in Switzerland, the financial watchdog could implement regulations to bring increased changes to the crypto market.
Furthermore, regulators take several months to years to regulate a market. Therefore, speculations were high that the bear market could have made them proactive about regulating the market.
Crypto exchanges to have a tough time?
Since Bitcoin is a decentralized cryptocurrency, regulating it would not be easy. However, crypto exchanges where most of the activity takes place are under the radar of these regulators.
The statement read,
“Crypto-asset service providers must at all times ensure compliance with existing legal obligations in the jurisdictions in which they operate. That includes requirements specific to crypto-assets as well as those general requirements that are also applicable. Any persons and entities operating in crypto-asset markets must be aware that they should meet all applicable regulatory, supervisory, and oversight requirements of a particular jurisdiction before commencing any operations.”
While this is just a statement, the fate of crypto exchanges remains in FSB’s actual regulations.
In addition to this, stablecoins also made it in the FSB statement. Terra’s collapse created immense commotion in the market, and the failed project paved the way for harsher regulations on the industry, particularly on stablecoins. The FSB intends to impose “robust regulations and supervision” on these assets.