CSF International Crypto Regulation

The Financial Stability Board (CSF or FSB) is the international economic grouping. Created during the G20 meeting in April 2009, the latter is concerned about the crypto market. Mainly following recent incidents and its growing interconnection with the traditional financial system.

CSF wants to propose international regulation for cryptos

The CSF brings together all the members of the G20. Its objectives are to cooperate and supervise in the field of supervision of financial institutions. If there’s one topic that’s been on the table for most countries lately, it’s the need to regulate the cryptocurrency industry more effectively.

Following the collapse of Terra or the fall in the price of Bitcoin as well as the growing difficulties of various exchange platforms that could lead to bankruptcy as with Celsius, the CSF is worried and wishes to propose a set of recommendations to the G20 from October 2022.

It was Monday the 11th that the CSF released a statement on the regulation and international oversight of cryptocurrency-related activities. In its announcement, the CSF indicates its desire to make a major effort to regulate this industry.

A report is therefore planned for finance ministers and central bank governors as early as October 2022. On the program, how to effectively regulate and monitor stable coins just like all other crypto assets.

The CSF thus hopes to be able to submit a public consultation report on the examination of the recommendations. This must include in particular “how the legal frameworks already in place can be strengthened while implementing advice at a higher level”.

As a bonus, another report will concern recommendations to promote global consistency on regulatory and supervisory approaches to cryptocurrencies. The efforts of the CSF and other bodies aim to try to minimize overly contrasting regulations in each country. The desire is to standardize the laws for this industry as much as possible worldwide.

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A growing concern

If the CSF decided to look into the case of cryptos, according to its press release, it is mainly following the major decline of the market. This one still weighed a few months more than 3 trillion dollars and now is only worth 930 billion dollars. Moreover, the various market incidents have highlighted a greater than expected interconnection with the traditional financial system.

The CSF adds on this subject:

This can have significant trigger effects on the traditional economy, especially such as short-term finance markets. Global regulators should oversee cryptos in accordance with the same business, same risk, same regulation principle.

Thus, in the case of a stable coin, it must submit to high standards of regulation and transparency while maintaining at all times sufficient reserves to preserve the stability of its value. It must also meet relevant international standards.

According to various crypto community officials, the task of the CSF is complex. Proposing global regulations for stablecoins will require many changes. Moreover, getting them adopted globally will take time. All this without certainty that all countries all share the same vision on this subject.

The CSF is powerless

Narek Gevorgyan, CEO of Coinstats was keen to point out that the CSF has no legislative powers. He still promised to make sure to respect the regulations concerning cryptos within the legal framework of the G20 countries. Through a statement via Cointelegraph, Gevorgyan cast doubt on the ability of the CSF to be able to embrace all regulatory approaches and protocols adding:

Defining more legal frameworks can help regulate the speculative aspects of centralized markets and platforms. Nevertheless, how does the CSF plan to integrate the hundreds of protocols already in existence and those to come, resistant to any sort of regulation by the nature of their design?”

Already last February, the CSF warned of multiple risks from the crypto industry. His main concern was notably the possible fall of a stablecoin, but also the lack of data in the industry as well as the rapid growth of DeFi platforms.

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The idea of ​​tightening regulations regarding the crypto industry is not new. The European Union is working to harmonize laws on this subject and this could in the future be taken up as an example in many other countries. The market situation has nevertheless accelerated this need, which is a reality.

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