Financial Stability Board (FSB) has recently released two documents with guidelines for frameworks that will comprehensively control crypto-assets as well as stablecoins.
The Financial Stability Board is composed of central bankers who are trying to get the message about the possibility that crypto industry may reach a level at which it could be threatening security of financial systems.
The FSB seems to see crypto in a rather simplified way, as it believes that regulation should be based on “same activity, same risk, same regulation.”
For central bankers who look at crypto by the lens of traditional banks, it will not be simple to assess the market from any kind of a sympathetic perspective, considering that the purpose of crypto will eventually be to replace existing financial system.
The FSB does not actually create regulations that could be imposed on financial assets, however it does have a huge influence due to the fact that it has regulators and bankers among its ranks from the majority of important economies around the world.
As of now, the recommendations from reports of the FSB reports are available for feedback and consultation until mid-December. The goal is to release a complete set of recommendations around the later in the year 2023.
The FSB examines what is the problem that concerns “interlinkages” between crypto-assets and the traditional financial system and believes that high standards of regulation should be established to ensure the proper supervision and oversight of stablecoins.
Stablecoins in themselves are an issue for the FSB since it believes customers should have stronger redemption rights and there must be an “robust stabilisation mechanism”.
The FSB is also concerned about the capability of stablecoins to maintain their stability in all conditions regardless of when markets are very stressed. The FSB said:
The FSB is comprised of the senior banks and regulatory officials which aren’t elected by the people they are supposed to serve. So it should be considered whether this is just another attempt to snuff the cryptocurrency market prior to it becoming established.
The fact that this financial institution should be so keen on its stability in the small market called crypto while the fiat currency system seems to be in its dying throes is another reason to be amazed.
In the minds of central bankers, the final possibility of the banking system’s future is the roll-out in central bank digital currency (CBDCs). If they are able to achieve this, then the complete control of all currencies could be theirs.