This week, the Financial Stability Board (FSB) published its reports on High-level Recommendations for the Regulation, Supervision and Oversight of Global Stablecoin Arrangements, and for the Regulation, Supervision and Oversight of Crypto-asset Activities and Markets. The initial consultation was conducted under the mandate of the G20. The FSB is an international standard-setting body and the objective of the two reports, though not legally binding, is to prompt a convergent regulatory approach to cryptoasset markets and stablecoins.
The High-level Recommendations for the Regulation, Supervision and Oversight of Global Stablecoin (GSC) Arrangements cover authorities’ readiness to regulate and supervise GSC, a comprehensive oversight of GSC activities, governance structures and decentralised operations, risk management, data storage and access, GSC recovery and resolution, disclosures, redemption rights, prudential requirements, and conformance with regulatory, supervisory and oversight requirements. According to the FSB, regulators should follow the principle of ‘same activity, same risk, same regulation’, which in DCGG’s view is an approach which runs the risk of inadequately addressing and even over-reaching on the industry in a way which will negate the positive economic benefits that can be had from a well-regulated crypto sector, as well as to misrepresent any potential risks associated with such groups.
The High-level Recommendations for the Regulation, Supervision and Oversight of Crypto-Asset Activities and Markets cover regulatory powers and tools, general regulatory framework, cross-border cooperation, governance, risk management, data collection, disclosures, addressing financial stability risks arising from interconnections and interdependencies, and regulation of CASPs with multiple functions. This report also promotes the ‘same activity, same risk, same regulation’ approach, which we see as potentially very onerous and harmful to the industry’s development.
As a reminder, DCGG provided evidence to the FSB consultation in late 2022 to inform the final recommendations. You can read DCGG’s consultation response and policy asks here .