Calls for International Cooperation for Crypto Regulation
The Financial Stability Report 2023 by the People’s Bank of China (PBC) discusses the rapid growth of the global crypto asset market. The report emphasizes the importance of international cooperation in strengthening supervision and making unanimous decisions regarding crypto regulation.
The report highlights obstacles associated with control, asset concealment, and data security. It states that crypto assets have a low asset ratio and do not integrate with the traditional financial system.
However, frequent risk events since 2022 have increased volatility in the crypto market. The report outlines a six-pronged strategy for addressing these risks.
The report also cautions against transparent cross-border business in decentralized finance (DeFi), which it sees as a potential global financial threat. It emphasizes the need for substantive regulation to support the financial and digital environments.
Currently, crypto assets account for 1% of the total global financial system. The report suggests cleaning up and reforming the market through an overhaul of the registration system.
Risks Related to Crypto Assets
The report mentions recent events like the FTX collapse as reasons for market fluctuations. Precautions against risks such as maturity mismatch, high leverage, and fraud in DeFi are important.
The report acknowledges that crypto assets are vulnerable to hacker attacks and calls for global cooperation in forming a supervisory body to effectively manage cross-border characteristics.
Hot Take: The Need for Global Cooperation in Crypto Regulation
The Financial Stability Report 2023 by the People’s Bank of China highlights the growing importance of international cooperation in regulating the global crypto asset market. The report emphasizes the need to address risks associated with crypto assets, including control, asset concealment, and data security.
Furthermore, the report calls for a thorough overhaul of the market and the formation of a supervisory body to combat risks effectively. It also stresses the potential global financial threat posed by transparent cross-border business in decentralized finance.
To ensure a stable and secure crypto market, global cooperation is crucial in implementing substantive regulation and making unanimous decisions regarding crypto regulation.
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