Financial Stability Board (FSB) – the international body that monitors the global financial system, has stricter regulations for cryptos are not necessary, as it does not see the crypto market as a threat to the financial system. However, it states that it could change its view if the use of virtual currencies grows or if they link to the existing regulated financial ecosystem. The report also acknowledged the benefits of blockhain technology.
In fact, the report from the FSB said that despite the risks of digital currencies facilitating illegal business such as money laundering and the dark web, the technology holds great promise for the current financial system. As a method of improving counterparty clearing, settlement systems as well as digitising ‘paper assets’.
The report stated:
“Crypto-assets raise a host of issues around consumer and investor protection, as well as their use to shield illicit activity and for money laundering and terrorist financing. At the same time, the technologies underlying them have the potential to improve the efficiency and inclusiveness of both the financial system and the economy,”
The FSB’s view is similar to that of U.S. Treasury Secretary, Steven Mnuchin. In February this year, Mnuchin said that he would raise the idea of cryptocurrency regulation at the G20 summit mainly to combat its use for money laundering and other illegal businesses, but he strongly believes that cryptocurrencies are not a risk to the financial market stability, at least at this point.
Before the G20 meet, Central Bank governors of France and Germany, French Finance Minister Bruno Le Maire, and German Chief of Staff Peter Altmaier proposed to include virtual currencies in the G20 agenda. It appears these calls have been shot down by the FSB.
According to the FSB, to form a global regulatory framework for cryptocurrencies, a more cooperative approach is required.