Financial Stability Board Delivers Report on Crypto-Assets
05/31/2019The Financial Stability Board has published a report on crypto-assets outlining the actions being undertaken by various international organizations in response to the challenges posed by crypto-assets and the FSB's own proposed course of action for the year ahead. The report will be delivered to G20 Finance Ministers and Central Bank Governors at the next G20 meeting in Japan on June 8-9, 2019.
The report examines the work of the following organizations in monitoring and/or regulating the crypto-asset market:
- Basel Committee on Banking Supervision: in line with its work strengthening the regulation, supervision and practice of banks across the globe, the Basel Committee has focused on establishing high-level supervisory expectations for banks engaged in the crypto-asset market, collecting data on bank exposures to crypto-assets (the results of which will be discussed at a Basel Committee meeting in October 2019) and a consideration of how banks treat crypto-assets for prudential purposes;
- Committee for Payments and Market Infrastructures: the CPMI's mandate is to promote the safety and efficiency of payment, clearing and settlement related arrangements and has considered digital innovations including digital currencies, tokenization and distributed ledgers in its studies; a recent study also focused on central bank digital currencies, with the CPMI advising central banks to proceed with caution on such currencies and organizing an outreach workshop on the subject for Q4 2019;
- FSB: the FSB's work has focused on monitoring risks to financial stability arising from crypto-assets and the preparation of a directory of crypto-asset regulators; in October 2018 it reported on the key risks inherent in crypto-assets markets and flagged certain financial stability implications; it continues to monitor the market despite maintaining its belief that at present, crypto-assets do not pose material risks to global financial stability; it published a directory of crypto-asset regulators in April 2019 and intends to submit a monitoring note including a review of developments in stablecoins and tokenization in September 2019;
- International Organization of Securities Commissions: IOSCO has considered crypto-asset concerns across a range of areas including trading, custody, clearing and settlement and the exposure of investment funds to crypto-assets; it has established an ICO Consultation Network for IOSCO members to discuss their concerns and previously published a Consultation Report reviewing the risks of trading crypto-assets on a crypto-asset trading platform for which it aims to publish a Final Report by the end of 2019; it is now in the process of developing an ICO Support Framework, and will make further investigations during the course of the year;
- Financial Action Task Force: the FATF, whose work focuses on targeting money laundering, includes "virtual assets" within the scope of its Recommendations (the series of measures it recommends countries implement to combat money laundering); in June 2019 it intends to adopt a new Interpretive Note to one of the Recommendations which will set out detailed implementation requirements for effective monitoring and supervision of virtual asset providers;
- Organization for Economic Cooperation and Development: the OECD has also been investigating crypto-assets and distributed ledger technology in the context of financial markets; it published a report in January 2019 examining the potential benefits and risks of ICOs and is now considering tokenization of assets; the OECD Blockchain Policy Forum will be held on September 12-13, 2019.
The report also notes that regulatory approaches to crypto-assets vary across jurisdictions, which could lead to discrepancies in the treatment of assets. The FSB considers that the rapid technological evolution of crypto-assets should influence the approach regulators take. In particular, FSB members have agreed that risk assessments will need to be forward-looking.
View the FSB's report.
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