The Financial Stability Board (FSB) has come out with a 9-point list of recommendations for regulating crypto assets, reported Business Line.
It has recommended that crypto asset issuers and service providers have a comprehensive governance framework with clear and direct lines of responsibility and accountability for all functions and activities.
G20 countries had tasked the FSB to suggest a regulatory framework. Now, this report will be part of a synthesis paper to be taken up during the G20 leadership summit under India’s presidency scheduled to take place in September.
The recommendations are contained in the paper titled ‘‘FSB global regulatory framework for crypto asset activities’’.
This “framework is based on the principle of ‘same activity, same risk, same regulation’ and provides a strong basis for ensuring that crypto asset activities and so called stablecoins are subject to consistent and comprehensive regulation, commensurate to the risks they pose,” the FSB said.
The FSB is an international body that monitors and makes recommendations about the global financial system.
On the general regulatory framework, one of the recommendations is that authorities should apply comprehensive and effective regulation, supervision, and oversight to crypto asset activities and markets — including crypto asset issuers and service providers — on a functional basis and proportionate to the financial stability risk they pose, or potentially pose.
The framework should be consistent with authorities’ respective mandates in line with the principle “same activity, same risk, same regulation”.
Another recommendation is on governance. It has been suggested that appropriate authorities should require that crypto asset issuers and service providers have in place and disclose a comprehensive governance framework with clear and direct lines of responsibility and accountability for all functions and activities they are conducting.
“The governance framework should be proportional to their risk, size, complexity, and systemic importance, and to the financial stability risk that may be posed by activity or market in which the crypto asset issuers and service providers are participating,” the framework said.
Talking about risk management, the framework recommended that crypto asset service providers have an effective risk management framework in place that comprehensively addresses all material risks associated with their activities.