FSB Plans to Release Crypto Regulation Guidelines for 2023

The recent happenings in the crypto industry have placed a sense of urgency on the need for regulation in the ecosystem.

Precisely, the implosion of FTX Derivative Exchange, bankruptcy filing, and the resignation of Sam Bankman-Fried served as an eye-opener to many investors and regulators alike. A global financial international organization, The Financial Stability Board (FSB) has announced plans to roll out guidelines for crypto regulation in 2023.

According to the outgoing Secretary General of the FSB Dietrich Domanski, the events that have taken place recently have exposed the need to address the risks involved in the crypto sphere. Many industry players have criticized global policymakers for failing to fill the regulatory vacuum, allowing crypto firms like FTX to misappropriate customers’ deposits.

It is believed that if these regulators had done their part, they would have discovered that crypto exchanges like Terraform and FTX had not met the criteria for sound governance. 

Regulators Launch Regional Crypto Regulations

Regionally, crypto regulators have tried to come up with a regulatory framework which will guide the ecosystem in their jurisdiction.

In the European Union (EU), regulators have come up with the Markets in Crypto Assets (MiCA) which is believed to possess the capacity to mitigate the effect of future implosion. Yet to be fully operational, MiCA has received the support of the Parliament through votes. 

Domanski stated that this guideline for crypto regulation which would be rolled out next year is aimed at putting crypto projects “to the same standards as banks . . . if they provide the same service that banks provide.” He mentioned that “Many crypto market participants argue that authorities are hostile to innovation. I would say so far, authorities have been fairly accommodating.”

Notably, it would include rules which “clarify governance arrangements and ensure transparency” and also safeguard users’ funds in case of an attack or rug pull.

The Secretary-General also mentioned that there would be no need to waste time in launching these regulations. “I don’t think that we would be talking about a decade,” he said, adding that any extra wait  “would be way too long.”

“One objective of this work plan is precisely to counter a perception that all this (work on cryptocurrency) is disperse and slow and is not focused on a single common goal,” Dietrich Domanski stated