LONDON (Reuters) -The Financial Stability Board (FSB) stated on Monday it might propose “strong” global rules for cryptocurrencies in October, following current turmoil in markets that has highlighted the necessity to regulate the “speculative” sector.
The FSB, a physique of regulators, treasury officers and central bankers from the Group of 20 economies (G20), has to date restricted itself to monitoring the crypto sector, saying it didn’t pose a systemic threat.
But current turmoil in crypto markets has highlighted their volatility, structural vulnerabilities and growing hyperlinks to the broader monetary system, the FSB stated.
“The failure of a market participant, in addition to imposing probably giant losses on buyers and threatening market confidence arising from crystallisation of conduct dangers, may shortly transmit dangers to different elements of the crypto-asset ecosystem,” the FSB stated in a press release.
The worth of bitcoin, the most important cryptocurrency, has slumped some 70% since its November report of $69,000 and was buying and selling at $20,422 on Monday, leaving many buyers nursing losses.
TerraUSD stablecoin collapsed earlier this 12 months, and withdrawals and transfers from main crypto companies Celsius Network and Voyager Digital have rattled markets.
Stablecoins must be captured by strong regulation if they’re to be used as a way of cost, the FSB stated.
“The FSB will report to the G20 Finance Ministers and Central Bank Governors in October on regulatory and supervisory approaches to stablecoins and different crypto-assets,” the FSB stated.
The FSB has no lawmaking powers however its members commit to making use of its regulatory ideas in their very own jurisdictions.
The watchdog is lagging the European Union, a number one member of the FSB, which agreed complete new rules for the crypto market this month.
The FSB stated cryptoassets are predominantly used for “speculative functions” however do not function in a “regulation free house” and should adjust to related current rules.
Many nations require crypto companies to have anti-money laundering controls.
“FSB members are dedicated to utilizing the enforcement powers inside the authorized framework in their jurisdiction to promote compliance and act in opposition to violations,” the FSB stated.
(Reporting by Huw JonesEditing by Louise Heavens and Mark Potter)