Crypto-Assets: FSB Report To The G20

By Jonathan Lawrence

The Financial Stability Board (FSB) has published a report to the G20 on the crypto-assets work of the FSB, Committee on Payments and Market Infrastructures (CPMI), International Organisation of Securities Commissions (IOSCO) and the Basel Committee on Banking Supervision (BCBS).

IOSCO confirms its belief that crypto-assets and platforms do not a pose global financial stability risk, nonetheless they raise other significant concerns (potentially needing further regulation) regarding investor protection, market integrity and money laundering. IOSCO suggests that it could work more closely with BCBS and CPMI for payment coin exchanges, which could be viewed more as spot market exchanges/payment infrastructures.

Key issues IOSCO may consider include: transparency, custody/settlement, trading and cybersecurity/systems integrity. It also notes that authorities can benefit from co-ordination with regard to supervision and enforcement. Existing regulatory models may rely on access through a regulated entity to support many investor protection objectives but access to such crypto-asset platforms currently may not involve such regulated entities.

The IOSCO Board has agreed to develop a support framework to provide a resource for members as they identify regulatory risks arising from ICOs and deal with domestic and cross-border issues raised by the offering of ICOs in multiple jurisdictions. The framework could also identify potential changes to local law that would facilitate consistent standards of protection between ICOs and conventional securities offerings and markets.

The CPMI’s future work may include legal issues around holding and transferring digital currencies. The BCBS is pursuing a number of policy and supervisory initiatives related to crypto-assets. The BCBS’s mandate is to strengthen the regulation, supervision and practices of banks worldwide.

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