The regulators behind G20, the Financial Stability Board (FSB) have begun research on cryptocurrencies and their potential effects on the overall global economy. This comes months after the G20 meeting, in which a compromise was reached amongst different regulators and marketplaces. The monitoring that will be completed will mostly be done with regards to how these digital assets could hurt global finance.
FSB to Start Regulating the Wild-west of Cryptocurrency
With the introduction of cryptocurrency and crypto assets came a considerable uncertainty in the regulatory field. Financial institutions and regulators that actively monitor money laundering, fraud, and monetary policy seemingly got stuck when it came to monitoring protocols and wild volatility swings in the crypto asset price. With the onslaught of interested investors, many of who are inexperienced, it seems the global financial authorities have taken a step towards monitoring the price action of cryptos.
A new framework has been put in place by the Financial Stability Board (FSB) the regulators that oversee G20 (A group of over 20 economies). The framework announced they would be looking at factors associated with ICO’s, including risks that crypto asset markets may pose to other parts of the traditional financial system. :
The FSB released in a statement on July 16, 2018:
“Monitoring the size and growth of crypto-asset markets is critical to understanding the potential size of wealth effects, should valuations fall.”
The report comes after South Korea reported it would start creating crypto-related regulations by G20 standards.
Taking a Neutral Regulatory Stance
While enforcing regulation is definitely a one-sided approach, it does not mean that overzealous regulation is necessary amongst crypto assets. While some nations have taken pro-crypto sides, the FSB is indicating they want to begin monitoring the markets for signs of manipulation and other fraud possibilities.
The FSB also must maintain a neutral stance on the regulatory stance after many nations have indicated a one-sided against-crypto stance. The FSB also stated that at the moment they do not have the most accurate and reliable data to begin acting on the monitoring of the markets.
The notions of the FSB will include monitoring the more currently regulated side of the crypto asset market which provides for Bitcoin futures which were launched by the CME group (An active participant in bringing cryptocurrency exposure to the public) in December 2017, and other government-affiliated crypto moves.
Cryptocurrency and Its Effect On Global Economy
The FSB’s job here indicates a couple of extremely significant factors; for one, they are the main regulator behind G20, the most extensive collection of economies. With that in mind, it raises the question of whether or not cryptocurrencies/crypto assets really can hurt the world’s economy.
Speaking on what the FSB will actually be doing and monitoring, they explained they would be emphasizing research on “The use of leverage, and financial institution exposures to crypto-asset markets… risks to the broader financial system.” With that in mind, it seems that the FSB will be researching and gathering more precise information about how cryptocurrencies can potentially harm existing financial structures if any.
Many have argued that crypto assets will have a positive everlasting effect on the economy, while others claim it could trigger a massive speculatory shift in price on a non-tangible asset; both can be true, and in essence, time can only tell which side is correct. Nonetheless, it seems that at the moment global regulators are trying to first understand the technology behind cryptocurrency before making moving in any direction.