The joint effort between the Financial Stability Board (FSB) and the International Monetary Fund (IMF) to align global cryptocurrency regulations could bring about substantial changes in the crypto realm. As highlighted in a recent letter by the chair of the FSB, Klaas Knot, a paper outlining these policy frameworks is scheduled for presentation at the G20 Summit over the weekend.
This paper tackles the intricacies of global policy coordination, cooperation, and information sharing related to cryptocurrencies. The creation of the document was prompted by India, the G20 presidency holder until December, echoing a growing need for comprehensive policy solutions to address the prolific risks associated with cryptocurrencies.
Two particular events emphasized such vulnerabilities in the crypto sphere – the bankruptcy of crypto exchange FTX, and the implosion of the terraUSD stablecoin. The growing intersections between the cryptocurrency world and the broader financial system necessitate the careful oversight of these kinds of potential threats, as outlined in the FSB letter.
The risks encapsulated by the world of crypto-assets extend beyond financial stability, Knot pointed out. There are also macroeconomic risks related to monetary sovereignty, capital flow volatility, and fiscal policy that need to be addressed. In response, the paper will underscore the magnified macrofinancial risks that both established and emerging markets may confront, suggesting that targeted measures may be required.
A report by CoinDesk in August indicated that G20 nations sought global collaboration in the paper and that India was advocating for the inclusion of dangers specific to developing economies and emerging markets, and their macrofinancial implications.
In July, the FSB voiced the need for a global regulatory framework. FSB officials emphasized that while important, these rules need not be entirely new but can build upon existing regulations. This holds promise for creating a stable, global crypto regulatory landscape that acknowledges the complexities of the crypto economy while managing its associated risks and ensuring its potential benefits can be fully realized. End of edit by Sheldon Reback.
Source: Coindesk
