- The G20 regulator also adjusted existing stablecoin recommendations
- Measures include making sure company funds are separate from customer funds
Globally agreed rules and regulations leave no option to crypto firms except to introduce safeguarding measures and prevent catastrophes like the FTX collapse, Reuters reported, citing recommendations published by G20’s Financial Stability Board on July 17.
The G20 requested the watchdog’s recommendations to monitor companies that transact in cryptocurrency. The regulator also adjusted existing stablecoin recommendations given the collapse of Terra and its stablecoin UST, as well as the Luna token.
Focus on robust governance to prevent financial risk
G20 wants measures to be taken before the crypto market grows to an extent that any volatility will be a threat to financial stability. These include focusing on solid governance to avoid conflicts of interest and making sure company funds are separate from customer funds.
The FSB commented, quoted by Reuters:
As recent events have illustrated, if linkages to traditional finance were to grow further, spillovers from crypto asset markets into the broader financial system could increase.
According to the watchdog, their recommendations should be applied by all countries, even ones outside G20. For example, FTX was headquartered in the Bahamas, which is not a member of the bloc. If this happens, all crypto companies will start to operate inside regulatory perimeters and in compliance with the rules.
The crypto market is getting bullish as the sector slowly recovers from crypto winter. Bitcoin has reached a one-year peak, boosted by Ripple’s unexpected legal victory against SEC.
Taking regulation “a step further”
While major jurisdictions like the European Union have already adopted crypto regulations, the FSB’s “minimum” global standards are aimed at accommodating regions that want to go a step further. The regulator’s norms will be refined through additional measures from IOSCO, Basel Committee, and other global authorities on banking and securities.
In May, IOSCO proposed the first global approach to regulating everyday crypto market operations. The FSB will review how the norms are implemented by the end of 2025.
