G20 Financial Stability Board Makes 9 Recommendations on Crypto Regulation


9 items recommended for virtual currency regulations

The Financial Stability Board (FSB), the international financial supervisory body for the Group of 20 (G20) countries, today announced nine recommendations related to crypto asset (virtual currency) regulation. At the same time, we are also revising our recommendations for stablecoins.

The FSB suggested that the collapse of the old Terra ecosystem last year, the FTX bankruptcy, and the chain of debt defaults that followed, were behind it.

Events over the past year have highlighted the inherent volatility and structural fragility of cryptocurrencies and the industry.

They also showed that the failure of a major service provider in the cryptocurrency ecosystem can quickly spread risk to other providers in the ecosystem, among others.

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The FSB recommends the following nine items.

  1. Ensure that authorities have the appropriate regulatory powers, tools and resources to monitor the market.
  2. Building a comprehensive regulatory framework
  3. International cooperation, coordination and information sharing
  4. Building a governance framework
  5. Building a risk management framework
  6. Data collection, recording and reporting
  7. Require multifaceted information disclosure for cryptocurrency companies
  8. Monitor interdependencies between companies
  9. adequately supervise a company that does several types of business

Regarding the “governance framework,” it said cryptocurrency companies should be required to create and disclose a clear and comprehensive governance framework. It must also address the risks, scale, complexity and financial stability risks of the company’s business, he added.

Regarding the “Risk Management Framework,” it also requires cryptocurrency companies, such as token issuers and trading platforms, to build a framework for responding to risks.

With regard to “management of companies conducting several types of business”, ensure that service providers and affiliates with multiple functions or activities are subject to appropriate regulation and oversight regarding conflicts of interest, separation of functions, etc. recommends that it should be

This item is thought to be based on the fact that the bankrupt virtual currency exchange FTX misappropriated customer funds to Alameda Research, a group company that was engaged in investment business.

In addition, multiple regulatory bodies have pointed out that there are risks in terms of conflicts of interest and other aspects of major cryptocurrency companies undertaking various functions such as exchanges, market making, and liquidity provision. By the way.

Recommendations for Stablecoins

The FSB has also revised its recommendations for stablecoins following public consultation and stakeholder feedback.

In addition to items similar to recommendations for cryptocurrencies in general, such as risk management, information disclosure, and international cooperation, it recommended oversight of user rights to redeem assets, stabilization mechanisms, and capital requirements.

What is a stablecoin

A cryptocurrency whose price is always stable. Stablecoins are a type of cryptocurrency, and unlike BTC, ETH, and XRP, which have volatility, their purpose is to maintain their value ($1) backed by the US dollar. In addition to US dollar-backed stablecoins (USDT/USDC), there are also stablecoins that use algorithms.

▶Cryptocurrency Glossary

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