The Financial Stability Board (FSB), which acts as the G20 countries’ financial watchdog, has released a fresh report regarding cryptocurrencies. In it, the FSB admits that cryptocurrencies do not pose a significant international stability risk, as some would have it seem. Moreover, the FSB also urges regulators around the globe to improve how they work with crypto risk assessments.
FSB: Crypto not inherently risky
The FSB’s latest report to G20 finance ministers and central bank governors was released this Friday. According to coverage by Reuters, the FSB highlighted that regulators do not seem to adapt to the quick technological change taking place in the cryptocurrency sector.
Moreover, current rules regarding cryptocurrencies are oftentimes unclear, illogical, and inconsistent. As such, this FSB report instructed national regulators to ”step up” their risk assessment of the cryptocurrency sector.
Furthermore, the report also noted that regulators should work to predict and prevent potential risks in the burgeoning industry. With that said, the FSB stated that the crypto industry does not pose a significant risk to global financial stability.
This is notable, seeing as some cryptocurrency non-believers have previously lambasted cryptocurrency adoption of jeopardizing international financial stability. Perhaps most notably, the notorious cryptocurrency critic Nouriel Roubini referred to cryptocurrency supporters as ”crypto terrorists” last year.
Nevertheless, the FSB said that ”digital coins [do] not currently present a material stability risk”. One of the suggested measures for the FSB to better foresee potential cryptocurrency risks would be to gauge banks’ and financial firms’ exposure to cryptocurrencies.
Cryptocurrency regulations can differ wildly between countries
The FSB also highlighted the discrepancy in global crypto regulations. While some countries, such as Malta, have made extraordinary accommodations to further cryptocurrency and blockchain innovation, others have resisted.
For example, Chinese regulators have implemented a close to complete ban on cryptocurrency exchanges, whilst Japan has licensed them. Furthermore, other countries’ regulators – such as the United Kingdom’s and United States’ – are still debating how to respond to cryptocurrencies.
The FSB is undoubtedly correct in noting that such international crypto-regulation discrepancies will create regulatory gaps. Such gaps and inconsistencies are yet another obstacle to general cryptocurrency adoption.
Clear, concise, and consistent regulation will likely be welcomed by the wider cryptocurrency community – as long as these are sensible. As such, the latest FSB crypto report is seemingly welcome news. However, it remains to see whether the G20 countries will even listen to the recommendations.
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Rasmus Pihl is a writer for Toshi Times by day and an avid follower of the cryptocurrency industry by night. Rasmus holds a Bachelor’s Degree in Marketing from the Gothenburg School of Business, Economics, and Law and runs a Swedish marketing consulting firm. Moreover, when he isn’t writing for Toshi Times, traveling, working or changing the world in some other capacity, Rasmus is more than likely caught up in postgraduate studies.