The Financial Stability Board has issued guidelines that emphasize the need for crypto platforms to separate clients’ digital assets from their own funds and establish clear divisions of functions in order to prevent conflicts of interest. The board, an international organization responsible for monitoring the global financial system, has developed a comprehensive regulatory framework for cryptocurrencies. These guidelines have been recommended to the G20, a group of the world’s leading economies, and are based on the principle of “same activity, same risk, same regulation.”
The FSB’s guidelines, released on July 17, consist of two sets of recommendations: one for regulating cryptocurrencies in general and another specifically for global stablecoins. The latter refers to stablecoins that can be used across multiple jurisdictions. The FSB emphasizes the importance of regulators ensuring close cross-border cooperation and oversight to enforce the segregation of assets and prevent conflicts of interest.
The board also recognizes the importance of privacy and acknowledges the potential challenges in identifying responsible entities in decentralized finance (DeFi) protocols. However, it emphasizes that authorities should have access to necessary data for regulatory, supervisory, and oversight purposes.
Regarding global stablecoins, the FSB highlights the necessity for stablecoin issuers to have identifiable and responsible governance bodies. It states that issuers must hold reserve assets in a minimal 1:1 proportion unless they meet prudential requirements equivalent to those of commercial banks. Additionally, the guidelines propose the potential requirement for global stablecoin issuers to obtain permits to operate in each jurisdiction, subject to meeting all regulatory and oversight requirements.
The FSB plans to review the global implementation of its recommendations by the end of 2025. In September 2023, it will release a joint report with the International Monetary Fund on existing policies and regulatory issues to the G20.
Earlier in July, the Association for Financial Markets in Europe referenced the FSB’s stance and urged European Union lawmakers to incorporate decentralized finance (DeFi) into the first EU-wide crypto framework.