The Call for Tougher Rules in the Crypto Industry
The Financial Stability Board (FSB), a standard-setting body, has called for stricter regulations in the crypto industry following a year of scandals and turbulence. The FSB, which consists of regulators from various jurisdictions, including the US, EU, China, and the UK, published recommendations aimed at safeguarding clients’ assets and preventing conflicts of interest. The recommendations were prompted by allegations of misconduct by companies like FTX and Celsius. The new norms proposed by the FSB may require major crypto conglomerates to separate certain activities and functions. The FSB cited the recent collapse of crypto-focused banks, the de-pegging of Circle’s USDC stablecoin, and the downfall of the terraUSD stablecoin as reasons for the need for tougher global rules.
Key Points:
– International standard-setters are calling for tougher regulations in the crypto industry.
– The Financial Stability Board published recommendations to ensure consistent and comprehensive regulation.
– The recommendations aim to prevent misconduct and conflicts of interest.
– Major crypto conglomerates may be required to separate certain activities and functions.
– The FSB cited recent incidents as reasons for the need for stricter global rules.
Different Approaches to Regulation:
– The European Union has crafted a tailored law known as the Markets in Crypto Assets (MiCA) regulation.
– The US Securities and Exchange Commission (SEC) is seeking to apply existing rules designed for traditional financial instruments.
– The FSB believes that similar rules should apply to both traditional financial activities and crypto asset activities.
Closing:
The crypto industry is facing increasing scrutiny and calls for tougher regulations. While some argue that stricter rules could stifle innovation, the FSB emphasizes the need for consistent standards to safeguard clients’ assets and prevent misconduct. As the industry evolves, it is important for crypto players to comply with basic expectations and standards. Striking a balance between innovation and regulatory oversight is crucial for the long-term stability and growth of the crypto industry.
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