Global Regulatory Watchdog FSB Stresses On The Need for Better Crypto Risk Assessments

As cryptocurrencies continue to penetrate the mainstream financial markets, global regulatory watchdog - the Switzerland-based Financial Stability Board (FSB) - has asked other regulatory agencies to step up their risk assessments strategies for the financial activity within the crypto space.

According to Reuters, FSB stated that the “current rules are patchy, and quick technological change may lead to gaps in policies on digital money”. In a report addressing the central bank governors and G20 finance ministers, the FSB noted that regulators should work to foresee the risks associated with the emerging crypto industry and how it could impact the financial stability.

Although digital currencies don’t present any material stability risk at this point, the FSB notes that it is important to assess the exposure of banks and other financial institutions to digital money. Besides, the FSB notes that the world need to come on one platform to deal with cryptocurrencies, investor protection, money laundering and financial stability, since they are currently handled differently by different jurisdictions.

Regulatory bodies across the globe have been having a difficult time dealing with cryptocurrencies and other matters related to it. The crypto mania of the late 2017 had caught the frenzy of retail investors and the bubble ultimately started bursting in 2018 with cryptocurrency market valuations dropping massively in an year’s time.

Besides, a number of crypto exchange hacking events and the existence of illicit practices like money laundering had damaged the image of cryptocurrencies. Regulators from different countries stepped-in white taking a few matters into their hands.

While China decided on an outright ban on digital currencies, other crypto-friendly nations like Japan and the United States pursued a balanced approach taking some regulatory action which they thought as necessary.

With the G20 regulatory body stepping in, it remains to be seen if the world arrives at a mutual consensus and has a common approach to deal with digital assets.