BASEL, Switzerland—Crypto asset companies should set aside capital like banks and credit unions when undertaking similar activities, regulators proposed in their first global rules as a "crypto winter" has wiped $2 trillion off the sector, according to the Financial Stability Board (FSB).
The FSB, which coordinates financial rulemaking among Group of 20 Economies (G20), noted the crypto sector is largely unregulated in most countries, having to only comply with rules for safeguarding against money laundering and terrorist financing, The Economic Times stated.
Klaas Knot, the Dutch central bank president who chairs the FSB, said the "crypto winter,” the term often used for the recent sharp decline in cryptocurrencies, has reinforced the board's assessment of existing structural vulnerabilities.
No Risk to Stability—Yet
The FSB said the crypto market, which has a combined value of about $935 billion versus $3 trillion at its peak in November 2021, is not big enough to threaten financial stability, but rules are needed.
"Concerns about the risks they pose to financial stability are therefore likely to come back to the fore sooner rather than later," Knot said in a letter to G20 finance ministers.
The FSB is recommending the putting in place of a framework for oversight, and managing risks and data at crypto firms, and having plans in place for a smooth shutting down of crypto asset firms in trouble, The Economic Times said.
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