The Financial Stability Board (FSB), an international organization that oversees and provides recommendations about the global financial system, has published a framework for regulating cryptocurrencies that calls for rules to be passed that are proportionate to the industry’s risks.
In the framework released on October 11, the FSB said that crypto laws should be thorough and consistent across all jurisdictions while aiming to preserve developments in the industry.
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Moreover, the FSB acknowledged that legislation should prioritize developing the sector’s technology while taking a page from the conventional banking sector.
According to the FSB, an efficient regulatory framework must ensure that crypto-asset activities are subject to specific regulations corresponding to their risks while maximizing the potential advantages of the technology underpinning them.
In addition, When they represent risks akin to those presented by conventional financial activities, such regulation should provide identical regulatory results while addressing the distinctive characteristics of crypto-assets.
Rules For Stablecoin
In other places, the agency urges stablecoin regulation, particularly in light of the Terra (LUNA) ecosystem disaster. In order to avoid failure, the framework advises authorities to verify that stablecoinS issuers fully support their assets extensively.
“Reliance on algorithms and arbitrage activities are not effective stabilization mechanisms. Indeed, as the report describes, many existing stablecoins, including Terra/Luna, would not meet the FSB’s high-level recommendations,” FSB added.
Following the framework’s release, the general public will have the chance to voice their opinions by December 15; the FSB notes that the goal is to achieve regulatory uniformity.