Members of the Financial Stability Board (FSB) are recommending new global regulations for crypto exchanges. These include measures to mitigate risk and avoid conflicts of interest.
More transparency for crypto exchanges
The FSB is an international financial institution, which consists of representatives from the G20 and is responsible for monitoring and coordinating financial stability.
As Reuters reported on July 17, the institution recently made recommendations on the global regulation of crypto exchanges. FSB Secretary General John Schindler advised all countries to adopt the recommendations, even if they are not members of the G20. This could also help avoid tragedies in the future, such as the collapse of FTX. The company was based in the Bahamas, which is not a member of the G20.
Aside from regulatory transparency for exchanges, crypto companies would also no longer be able to plead ignorance, Schindler said.
The Basel Committee on Banking and the International Organization of Securities Commissions (IOSCO) will develop even more detailed rules. The latter proposed this global approach back in May.
In July 2022, the FSB published a draft with new recommendations, which G7 leaders committed to implement. In addition, they also accepted the Financial Action Task Force’s global recommendations to reduce the risk of money laundering in cryptocurrencies.
The recommendations are to finally come into force from 2025.
New draft law addresses recommendations of the EU Supervisory Board
As Elizabeth McCaul, a member of the EU’s Supervisory Council, opined earlier this year, any assessment of an exchange’s risk profile should take into account all the countries in which it operates. The European draft law on markets for crypto-assets (MiCAR) is therefore a good start, she said, but could be improved.
The law regulating exchanges and cryptocurrencies was already adopted by the European Union in April, but it is not expected to come into force until the end of 2024.
According to the FSB, the new recommendations can help companies whose activities are not caught by laws, such as MiCAR. They would also provide an overarching framework that countries need to manage risk, according to McCaul.
Meanwhile, things remain exciting in the United States. Just last week Thursday, the U.S. Securities and Exchange Commission (SEC) lost part of its case against Ripple Labs. The final outcome of this court case could affect the way the country deals with the crypto industry in the future.
In addition, U.S. Senators Lummis and Gillibrand reintroduced their Responsible Financial Innovation Act to Congress last week. This proposes to define the majority of all cryptocurrencies as commodities rather than securities.
Photo Copyright: peshkova
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