The world’s most powerful global financial watchdog group is preparing to instate strict propositions for regulating the crypto sector in early 2023, along with a timeline regulators should stick to for implementing them.
“Recent events have reinforced the recognition that it is indeed urgent to address risks,” Dietrich Domanski, Secretary General of the Financial Stability Board, told the Financial Times on his final day in office after a five-year term. John Schindler, a director at the Federal Reserve’s financial stability division, is stepping up to take his place.
The collapse of crypto exchange FTX has turned regulators’ heads worldwide as governmental hearings pressed the topic of crypto supervision.
“I think the work plan will reflect the urgency,” Domanski said. At the same time, Domanski noted that there are limitations to how quickly the FSB can operate while learning to understand crypto markets. “All of those who say, you should move faster, you should do more, I would invite them to follow a global co-operative process . . . and then tell me where there are spots that we could have moved faster.”
The FSB — comprised of central bankers, finance officials and regulators from G20 countries — met in Basel last week. Lessons from the FTX debacle featured prominently on the agenda. The group called for “ongoing vigilance and the urgency of advancing the policy work program by the FSB and the standard-setting bodies to establish a global framework of regulation and supervision, including in non-FSB member jurisdictions.”
Decentralized finance received particular attention, as the FSB promised to explore ways to fill the gaps in DeFi supervision.
The FSB published a report of high-level recommendations on regulating the crypto industry in October, which will continue influencing crypto regulation worldwide.
Disclaimer: Beginning in 2021, Michael McCaffrey, the former CEO and majority owner of The Block, took a series of loans from founder and former FTX and Alameda CEO Sam Bankman-Fried. McCaffrey resigned from the company in December 2022 after failing to disclose those transactions.
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