International standard-setters demanded more regulations on Monday to protect the assets of cryptocurrency clients and prevent conflicts of interest in the wake of numerous allegations of unethical activity during the industry’s recent difficult year.The Financial Stability Board (FSB), which brings together regulators from about 20 different countries and regions, including the U.S., EU, China, and the U.K., has released proposals to ensure “consistent and comprehensive” supervision of the industry.The guidelines are intended to stop the kind of conduct that firms like FTX and Celsius are claimed to have engaged in and are an expansion of ideas that were first floated in October.
“The events of the past year have highlighted the intrinsic volatility and structural vulnerabilities of crypto-assets and related players,” said the document, announcing new standards that would require huge crypto corporations to split up some of their operations.
A flurry of claims of bad record-keeping and misusing consumer funds have been made against FTX, which declared bankruptcy in November.Alex Mashinsky, a co-founder of Celsius and a former CEO, was detained in New York on Thursday and has pled not guilty to many accusations that he deceived investors and manipulated token values for his own benefit.
The recent failure of crypto-focused institutions, the brief de-pegging of Circle’s USDC stablecoin two months ago, and the abrupt demise of the terraUSD stablecoin in May 2022 that signaled a new crypto winter were all mentioned by the FSB in laying out the case for stricter international regulations.
Major international players are approaching the regulation of cryptocurrency from various angles.The U.S. Securities and Exchange Commission (SEC) is attempting to claim that it may apply existing laws that were created a century ago for traditional financial products, while the European Union has created a new customized law known as the Markets in Crypto Assets (MiCA) regulation.The FSB’s guiding principles ought to be adaptable enough to support both strategies, but officials are keen to emphasize continuity.
“This global framework does not rewrite or create a completely new regulatory rulebook for crypto assets,” FSB Secretary General John Schindler told reporters. “Crypto asset activities are not as different from traditional financial activities as some would have us believe, and similar rules should apply.”
“While jurisdictions work to implement these standards, we would encourage all crypto-asset players to start to comply with these basic expectations and standards now,” he added.
The final proposals come after a consultation in which traditional financial institutions urged for more crypto controls while firms like Binance and Coinbase cautioned that such restrictions may stifle innovation.