Many stablecoins fall short of coming crypto regulatory recommendations, says FSB chair

Muhammad Naeem

Blogger

The Financial Stability Board (FSB), which was established at a G20 conference in 2009, contains members who represent organizations from more than 20 jurisdictions, including central banks, financial regulators, and ministries of finance. Despite having the ability to advise international politicians, the board mostly serves as an advisory body without any enforcement power.

In July 2022, the BIS Committee and IOSCO issued guidance for the regulation of stablecoin and In December FSB warned of impeding implementation to the crypto developers. FSB had already proposed a comprehensive framework for crypto regulations.

A new wave of Crypto Regulations:

The LUNA fall and then the FTX crash hurt many investors around the globe, alarming the financial watchdogs and raising questions. Since then, governments have been taking measures to save their citizens from falling prey to these projects by implementing certain rules for these projects. Some governments are going hard on crypto projects and banning them altogether; others are trying to keep a balance between supporting crypto projects and still protecting their citizens.

Types of actions these governments might take include, banning, limiting, and implementing more stringent regulations. One of the most common measures is making the KYC (Know Your Customer) being made mandatory for the centralized ecosystems like Binance and Coinbase. In addition to KYC, governments might demand that crypto projects comply with Anti Money Laundering (AML) and Counter-Terrorism Finance (CTF) regulations.

Last week the SEC stated that Binance’s stablecoin BUSD is an unregulated security. This news impacted the entire Binance ecosystem and even the stablecoin de-pegged for a while. Also, Binance coin BNB lost more than 11% due to the FUD. FUDs are evidently not over, as FBS seems ready to crack down on the stablecoins which are not complying with their regulations.

FSB is expanding its surveillance to other blockchain products as well. On Feb 16, FBS chair Klaas Knot said:

Importantly, the FSB’s work concludes that many existing stablecoins would not currently meet these high-level recommendations, nor would they meet the international standards and supplementary, more detailed BIS Committee on Payments and Market Infrastructures-International Organization of Securities Commissions guidance.

The FSB will provide suggestions for specific standard-setting organizations and monitor their implementation after publishing its final recommendations for regulatory and supervisory approaches to crypto assets and stablecoins in July.

As a result, while cryptocurrency restrictions may appear to be a barrier to crypto fans, they really protect their cash from being stolen by another FTX.

Conclusion:

Overall, the future of cryptographic rules remains unknown as different governments approach the industry in different ways. However, it is apparent that as the crypto business grows and matures, laws will continue to evolve and become more stringent. Regardless of these constraints, it is obvious that cryptocurrency laws will ultimately benefit crypto fans and the sector as a whole.