G20 Advisory Body Publishes Framework For Monitoring Cryptocurrencies

News, Regulation | July 16, 2018 By:

The Financial Stability Board (FSB) has published a framework for monitoring cryptocurrencies like bitcoin.

The FSB is an international body that monitors and makes recommendations about the global financial system. It was established after the G20 London summit in April 2009 as a successor to the Financial Stability Forum (FSF). The Board includes all G20 major economies, FSF members, and the European Commission. Hosted and funded by the Bank for International Settlements, the FSB is based in Basel, Switzerland.

Titled “Crypto-assets: Report to the G20 on the work of the FSB and standard-setting bodies,” the framework has been developed by the FSB, in collaboration with the Committee on Payments and Market Infrastructures (CPMI), and has been submitted to the G20 nations’ financial ministers and central bank governors.

The report lists several metrics that the FSB will use to keep an eye on the developing crypto markets and “should help to identify and mitigate risks to consumer and investor protection, market integrity, and potentially to financial stability.” These include the size of the cryptocurrency market, the exposure of financial institutions to that market, and the number/nature of financial derivatives based on cryptocurrency.

“While the FSB believes that crypto-assets do not pose a material risk to global financial stability at this time, it recognizes the need for vigilant monitoring in light of the speed of market developments,” the FSB said.

The FSB believes that the proposed metrics would provide a useful picture of crypto-asset markets and the financial stability risks they may present. As understanding develops and new sources of public data become available, the FSB and the CPMI will consider how improvements can be made. In particular, the FSB will continue to work on assessing data reliability and data completeness for the existing metrics. Additionally, the FSB will assess whether new metrics could be added at a later stage.

In March of this year, G20 financial policymakers have set a July deadline for the first step toward unified regulation of cryptocurrency. The FSB said that the Financial Action Task Force (FATF) will report separately to the G20 on its work regarding money laundering and terrorist financing risks relating to cryptocurrencies.