International watchdog the Financial Stability Board, or FSB, called for a global framework aimed at regulating and monitoring crypto after the collapse of FTX, also saying it would assess vulnerabilities related to decentralized finance.
At a December 6 meeting in Basel, Switzerland, the FSB said it plans to “enhance the crypto-asset monitoring framework” to include “DeFi-specific vulnerability indicators” as well as address the potential impact of DeFi being closer to traditional financial markets. The watchdog said that crypto market turmoil such as FTX’s current collapse poses limited risks, which are exacerbated by “the connection of crypto asset companies with markets and core financial institutions.”
“Crypto trading platforms, combining various activities that are usually separated in traditional finance, can lead to risk concentration, conflicts of interest, and misuse of client assets,” the FSB said. “At [FSB] underlines the importance of continued vigilance and the urgency of developing a policy work program by the FSB and standard-setting bodies to create a global regulatory and supervisory framework, including in FSB non-member jurisdictions.
The FSB plenary met today in Basel. Topics covered include the outlook for financial stability; #cryptoasset and decentralized finance (#DeFi); overcome the financial risk of #ClimateChange; and the problems that affect it #emerging market and developing economieshttps://t.co/Oketd2CSZL pic.twitter.com/ZTnm8oTaia
– FSB (@FinStbBoard) December 6, 2022
The FSB has been there before propose a comprehensive framework for crypto aims to overcome potential risks while “using the potential benefits of technology.” Members of the public also have until December 15 to comment on the group’s recommendations on stablecoins.
Established at the G20 summit in 2009, the FSB has members representing institutions such as financial regulators, central banks and finance ministries from more than 20 jurisdictions. Although these councils can advise global policymakers, they generally act as advisory bodies with no enforcement powers.