Global Financial Regulator Says Crypto Assets Pose “No Material Risk” to Financial Stability

Avi Rosten

The Financial Stability Board (FSB), the global regulator that advises the G20 – Group of 20 Economies - on financial regulation, has today published a framework for monitoring the risks of crypto assets.

The report, prepared in advance of the meeting of the G20 Finance Ministers and Central Bank Governors in Buenos Aires this weekend, explains that the FSB believes crypto assets for now “do not pose a material risk to global financial stability” but nonetheless require “vigilant monitoring” due to the rapid pace at which the market is developing.

With the framework designed for the early detection of any risks to global financial stability – the FSB identify several metrics that can act as indicators for monitoring crypto-assets and derivatives including “metrics on trading volumes, pricing, clearing and margining for crypto-asset derivatives.”

Although acknowledging that the data required is far from complete – particularly due to the rapid pace of growth in the industry - the report explains that the framework is open to revision as more data becomes available.

The report also references Bank of England Governer and chair of the FSB Mark Carney’s letter in March to the G20 where he raised the oft-cited issues surrounding investor protection and money laundering that crypto-assets raise.

Regulatory Environment

This latest statement from regulatory officials echoes similar statements made by South-Korea’s central bank - BOK (Bank of Korea) last Monday.

Pointing to the peak trade balance of 2 trillion Won ($1.79bn) reached during December 2017’s frantic market, BOK concluded in a report that the amount represents a limited risk to other markets and financial institutions due its relatively small size. 

Other G20 members however, have recently issued more cautionary advice – with France’s financial regulator the Autorité des Marchés Financiers (AMF) on Tuesday issuing an updated statement warning of the increasing risks of fraudulent schemes associated with cryptocurrencies.