Hurry Up and Regulate Crypto, FSB Chair Urges World Leaders
The Financial Stability Board (FSB) is asking global finance ministers to step up their efforts in creating regulatory frameworks for crypto and other innovative digital payment systems.
“Pressures That Can Lead to Market Fragmentation Exist”
Crypto assets and their underlying blockchain technology have already disrupted the financial world to a great extent. As a result, world business leaders are now panicking as they fear that digital technologies are gaining such momentum that they could eventually shatter the financial markets as we know them.
This week, Randal K. Quarles, Chair of the FSB and Governor and Vice Chairman for Supervision of the U.S. Federal Reserve, is pleading to regulatory bodies to step up their focus on the impact of crypto on the banking industry.
Indeed, Quarles points out that regulators are failing to catch up with the swift developments occurring in the payment industry. In a letter dated February 18, 2020, addressed to finance ministers and G20 central bank governors, Quarles wrote,
Technology is changing the nature of traditional finance; the non-bank sector has grown, and requires deeper understanding and coordination among the supervisory and regulatory community. Pressures that can lead to market fragmentation exist. Concurrently, important supervisory and regulatory issues require attention.
Quarles highlights the speed of technological advances occurring in the crypto payments sector and the advent of stablecoins. And he ensures the FSB’s resolve “to quicken the pace of developing the necessary the regulatory and the supervisory responses to these new instruments.”
In his letter, Quarles promises to issue a draft report on these regulatory issues in April 2020.
Cross-Border Payment Crypto Assets Pose Highest Threat
Moreover, Quarles believes that crypto tokens used as payment substitutes might become globally systematic “not least because they may fill needs not met by existing cross-border payment systems.”
Aware of the importance of implementing efficient and inclusive payment services for global growth, Quarles informs that the Saudi G20 Presidency has already asked the FSB to take the lead and prepare a roadmap to improve cross-border payment systems.
How do you think regulators can effectively get up to speed on cryptocurrencies? Let us know your comments below.
Images via WSJ