The Financial Stability Board will propose global crypto regulations in October following the recent crypto crash.
The global watchdog said it is working towards ensuring that crypto is subject to tight oversight and will “submit a public consultation report that proposes recommendations for promoting international consistency of regulatory and supervisory approaches to crypto-assets and crypto-asset markets” while “strengthening international cooperation and coordination,” it said on Monday.
The FSB said that an effective regulatory framework needs to make sure that crypto activities which pose similar risks as traditional financial activities are subject to the same regulatory outcomes.
It mentioned crypto assets being subject to relevant regulations that are applicable to their underlying economic and financial nature, in line with the principle of “same activity, same risk, same regulation.”
The regulator’s views echo those of Bank of England Deputy Governor Jon Cunliffe, who also called for a “same risk, same regulatory outcome” approach.
The FSB will submit recommendations for regulating crypto assets and stablecoins to G20 finance ministers and central bank governors as the crypto crash pummels the industry.
The FSB said the recent “turmoil” in crypto markets highlighted “their intrinsic volatility, structural vulnerabilities and the issue of their increasing interconnectedness with the traditional financial system.”
It urged functional regulation to tackle the risks crypto posed both domestically and internationally. The regulator said it will keep facilitating cross-border and cross-sectoral cooperation among national authorities and international standard-setting bodies.
The FSB said its work with these international bodies would seek to minimise the “risk of fragmentation and regulatory arbitrage.”
The watchdog also emphasised the importance of tight laws for stablecoins if they are widely adopted as means of payment or take on an important role in the financial system. It said such stablecoins could pose risks to financial stability without appropriate regulation.