The last time we heard from the Financial Stability Board (FSB) it was positive news. In July, it said that the crypto market “[does] not pose a material risk to global financial stability at this time.” The G20 and crypto community was thrilled by this announcement, however three months later it appears to have backtracked on that statement.
The FSB is made up of members from the G20 and it acts an advisory board to the G20 delegation. It had promised to monitor the crypto markets and related industries in its last announcement, and clearly it wasn’t too impressed with what it saw.
A Developing Problem
The FSB was very clear to highlight that while cryptos aren’t currently a direct threat to global markets, if they continue to grow at their current rate without proper regulation then they could cause serious economic damage. Fortunately for the FSB, many nations around the world have the same fears and are actively working to implement stringent crypto regulations to prevent this threat from developing.
Disarming the Threat
One of the best ways to disarm the threat that cryptos have over the global markets is through proper regulation. Malta has been very impressive in this department, recently passing three crypto-friendly bills into law. While it isn’t the first nation to do so – despite Joseph Muscat’s claims – other nations are slowly looking to Malta for help and support. Vanuatu has already been in touch with the Maltese government and asked for crypto regulation help, a great sign that nations want to quash this threat before it causes economic hardship.
More Protocols Desired
The FSB has highlighted the need for more stringent protocols relating to anti-money laundering (AML), know your customer (KYC), terrorism financing protections, and crypto tax laws. Most crypto exchanges are slowly implementing advanced KYC and AML checks, as a means to prevent their platform from being abused. Yet, there are still a handful out there that aren’t making the switch. In addition to this, many in the crypto community still don’t believe that these rules should exist in a decentralized world and it’s beginning to cause rifts in the crypto community.
While the FSB is only making these recommendations to the G20 in an effort to protect investors, it’s news that could be misconstrued. Hopefully, the G20 understand that while the FSB says crypto could be a threat in the long term, it isn’t for now and with proper regulations and oversight it will grow in harmony with the global economy.