G20 regulator to present first global crypto rules in October

July 12 (MT Newswires) -- The Financial Stability Board, which includes central bankers and treasury officials from G20 countries, is working on bringing global cryptocurrency regulations to the industry by October.

Such regulations have become a necessity due to the recent collapse of the cryptocurrency market, which led to the loss of billions of dollars.

Commenting on the need for regulation, the FSB said, "The failure of a market player, in addition to imposing potentially large losses on investors and threatening market confidence arising from crystallization of conduct risks, can also quickly transmit risks to other parts of the crypto-asset ecosystem."

The market player referred to here is Terra.

Before May's market crash, the cryptocurrency sector was led by bitcoin. Alternative coins like Terra would have followed BTC's price patterns instead of leading the way for other digital assets to follow.

A great example of this was in May 2021 when Elon Musk announced the delisting of bitcoin as a payment method for Tesla products, which was followed by a further crackdown on the use of digital assets by the Chinese government. Bitcoin then shed a substantial part of its price and other cryptocurrencies followed.

When the market recovered in August and rallied to new highs in November 2021, altcoins followed in the steps of the most popular cryptocurrency, bitcoin. However, the story has been different this year as stablecoins such as TerraUSD led the market into a bearish cycle. This has brought the Financial Stability Board's attention onto stablecoins.

A section of regulations will be primarily focused on providing guidelines for stablecoin management. The FSB further stated that it will be reporting to central bank governors and G20 finance ministers in October concerning supervisory and regulatory approaches to digital assets and stablecoins.

The FSB urged members to remain committed to enforcing a legal framework, as well as complying with rules within their respective countries.

Despite proposing regulations for the decentralized finance sector, the financial body does not have any lawmaking mandates. However, member states that feel there is a need for regulation can submit applications.

Aside from working on unveiling a regulatory framework by October, the Financial Stability Board has been working in tandem with the International Organization of Securities Commissions.

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