On 11 October 2022, the Financial Stability Board (FSB) published a public consultation on a proposed framework for the international regulation of crypto-asset activities to ensure that these activities are subject to comprehensive regulation, commensurate to the risks they pose, while harnessing potential benefits of the technology behind them.

The core components of this framework are proposals for:

• recommendations that promote the consistency and comprehensiveness of regulatory, supervisory, and oversight approaches to crypto-asset activities and markets and strengthen international cooperation, coordination, and information sharing; and
• revised high-level recommendations for the regulation, supervision, and oversight of “global stablecoin” arrangements to address associated financial stability risks more effectively.

The two sets of recommendations are closely interrelated, reflecting the interlinkages between stablecoins and the broader crypto-asset ecosystem. They are grounded in the principle of “same activity, same risk, same regulation”: where crypto-assets and intermediaries perform an equivalent economic function to one performed by instruments and intermediaries of the traditional financial sector, they should be subject to equivalent regulation.

The proposed framework, which is published in the full consultative document, sets out:

• The key issues and challenges in developing a comprehensive and consistent regulatory approach that captures all types of crypto-asset activities that could give rise to financial stability risks
• Policy initiatives at the jurisdictional and international levels
• The FSB’s proposed approach for establishing a comprehensive framework

The Annexes to the consultative document include Annex 1, which looks at essential functions, risks and relevant international standards, and Annex 2, which is a study of features of existing crypto-asset trading platforms and DeFi protocols. Both may be of interest to relevant market participants.

The FSB is soliciting comments from the public on the proposed recommendations and encourages all interested stakeholders to participate in the consultation. The framework note includes a set of questions for this purpose. Responses should be sent via email to fsb@fsb.org by Thursday 15 December 2022.

The press release can be found here.

FSB’s proposed framework – questions for consultation can be found here and the consultative report can be found here.