In light of the crypto sector’s ongoing crisis, the Financial Stability Board or FSB, an organisation that advises on matters relating to international finance, has promised to soon report on the regulation of activities involving cryptocurrency.
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Citing the “recent turmoil” in the crypto market, the FSB’s statement underlined the need for common domestic and international standards in order to regulate crypto assets, including stablecoins.
“Stablecoins should be captured by robust regulations and supervision of relevant authorities if they are to be adopted as a widely used means of payment or otherwise play an important role in the financial system,” stated the FSB report published on Monday.
Stablecoins are cryptocurrency tokens which are attached or “pegged” to the value of assets like dollars, pounds, euros, or even gold and oil. These assets are popular in economies where the official currency is rapidly losing value.
However, in May this year, the TerraUSD [UST] stablecoin - where every UST was meant to be worth 1 USD - collapsed, blasting billions of dollars in value off the market
The following month, the prices of Bitcoin and Ether nosedived as well, plunging huge crypto companies and lending platforms into crisis. The freezing of user funds and mass layoffs followed.
“The FSB is working to ensure that crypto-assets are subject to robust regulation and supervision. The FSB will report to the G20 Finance Ministers and Central Bank Governors in October on regulatory and supervisory approaches to stablecoins and other crypto-assets,” stated the report.
The Switzerland-based organisation also highlighted the need for regulatory standards to combat money laundering, terrorist-financing, and to enforce travel rules for crypto moving across borders.
The G20 major economies - including India - and the European Commission are all members of the Financial Stability Board.
