- Update comes after a series of high-profile crypto lending firm closures.
- FSB plans to provide reports in October this year.
To ensure “robust regulation and supervision” of cryptocurrencies, the Financial Stability Board (FSB) announced today. According to the G20 Treasury and Central Bank leaders’ group, they plan to provide a report in October explaining their regulation and oversight approaches to stablecoin and other crypto assets to G20 finance ministers and governors of central banks.
FSB stated:
“Crypto-assets, including so-called stablecoins, are fast-evolving. The recent turmoil in crypto-asset markets highlights their intrinsic volatility, structural vulnerabilities and the issue of their increasing interconnectedness with the traditional financial system.”
Global Watchdog Supervising the Sector
In addition to “imposing potentially large losses on investors and threatening market confidence,” the group said that even the collapse of a single market participant might “quickly transmit risks to other parts of the crypto-asset ecosystem.”
Today’s news comes after a series of high-profile crypto lending and hedge fund organizations were forced to close their doors after the collapse of the Terra ecosystem in May. The FSB’s proposal is notable since it is the first time the organization has proposed specific regulations for the crypto sector, even though it has carefully watched the industry.
A four-year low in the price of major cryptocurrencies has sent the crypto market into a pessimistic trend. Several crypto companies like 3AC, Voyager Digital, etc have gone out of business due to the current crypto market collapse, while others have had to make significant employee layoffs to stay afloat.
The Terra fiasco, which resulted in the loss of $40 billion in investor funds, was the catalyst for the current crypto market crisis. Cryptocurrency markets could not withstand the enormous collapse that occurred following the fall.
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