During the last G20 meeting, the leaders of the 20 world powers pointed out the “critical” need for international rules and bylaws to govern the crypto space to be modified.
The Financial Stability Board, made a series of proposals about possible regulations that would make both crypto firms and crypto markets governed under the same nomenclatures as traditional finance.
The mandarins seek to ensure that the crypto environment and everything that surrounds it is adequately regulated, in addition to adjusting to a supervision that would reduce the potential risks that they could represent for financial stability.
As if it were not enough the crisis that the digital assets environment is going through due to the bearish period, with steep falls that cryptocurrency prices have experienced in recent months, better known as crypto winter, a new scandal has been added to bring this digital money sector back into the spotlight: the fall and bankruptcy of the firm FTX.
After the recent situation and ordeal that FTX has gone through, many analysts are wondering which will be the next operator to fall, in addition to increased demands for stricter regulatory controls.
In fact, some analysts have been very critical. Economist Nouriel Roubini, known worldwide for predicting the 2008 crisis, participated in a financial forum in Abu Dhabi, where Roubini described the entire crypto industry as “an ecosystem that is totally corrupt,” noting that it is full of “cheats, scoundrels, hucksters, hustlers and scammers.”
Cryptocurrencies must be regulated
Among the loudest demands is a high-powered group, which includes U.S. President Joe Biden. During the last meeting of the Group of 20 (G20) leaders pointed out the “critical” need for international rules and statutes to govern the crypto space to be modified, in addition to pointing out the potential risks that this type of digital money represents for “financial stability”.
In this regard, the world leaders wrote a statement in which they indicated the imperative need to raise public awareness of the threats, as well as to strengthen regulatory outcomes and help level the playing field, while harnessing the benefits of innovation.
Similarly, last October, the international monitoring body Financial Stability Board, (FSB), outlined a series of proposals about possible regulations that would bring both crypto firms and markets under the same nomenclatures as traditional finance.
“We welcome the FSB’s proposed approach to establish a comprehensive international framework for the regulation of cryptoasset activities based on the principle of ‘same activity, same risk, same regulation,” the G20 leaders said.
The leaders are seeking to ensure that the crypto environment, and all that surrounds it, is adequately regulated, in addition to conforming to oversight that will reduce the potential risks they could pose to financial stability.
“Effective regulatory and supervisory frameworks must be based on the principle of ‘same activity, same risk, same regulation.” Where cryptoassets and intermediaries perform an economic function equivalent to that performed by instruments and intermediaries in the traditional financial sector, they should be subject to equivalent regulation,” the FSB said.
Similarly, the board integrated stable currencies into its report, noting the need for a review of the recommendations set out in October 2020. In this regard, members of the public have until December 15 to submit comments on the proposals.
Cryptowinter
In an accompanying letter to the G20 dated last October 3, Klaas Knot, president of the FSB, pointed out and made clear the current situation the cryptocurrency market is going through:
“The current ‘cryptowinter’ has reinforced our assessment of the structural vulnerabilities existing in these markets. Concerns about the risks they pose to financial stability are therefore likely to resurface sooner rather than later, as are public expectations that policymakers have a robust international framework to identify, monitor and address those risks.”
