On July 16, the Financial Stability Board (FSB) published a report on the work of the FSB and standard setting bodies on cryptoassets. The report was delivered to the G20 Finance Ministers and Central Bank Governors ahead of their meeting on July 21 – 22.
The standard setting bodies, whose work is summarized in the FSB’s report, are: (1) the FSB itself; (2) the Committee on Payments and Market Infrastructures (CPMI); (3) the International Organization of Securities Commissions (IOSCO); and (4) the Basel Committee on Banking Supervision (BCBS). In relation to each body, the report includes the following:
- FSB—While agreeing that cryptoassets “do not pose a “material risk to global financial stability at this time,” the FSB, in collaboration with the CPMI, has developed a framework to monitor the speed of changes in this area and data gaps. The FSB will continue to seek to improve this framework.
- CPMI—The CPMI has published reports on digital currencies and distributed ledgers in previous years, and is continuing to monitor and analyze developments in those areas. Its work has focused on assessing the opportunities for increased efficiency and the possible loss of safety which are associated with these innovative technologies.
- IOSCO—In January 2018, IOSCO issued a communication (available here) raising its concern with initial coin offerings (ICOs). In May 2018, its board agreed to develop a support framework, which is still in progress, to enable its members to identify regulatory risks relating to ICOs and the offering of ICOs in various jurisdictions. It is considering various examinations with respect to cryptoasset platforms (more commonly, “crypto-exchanges”), and also established an ICO consultation network.
- BCBS—The BCBS’s work falls into three categories: (1) quantifying the materiality of banks’ direct and indirect cryptoasset exposures; (2) clarifying the prudential treatment of banks’ cryptoassets exposures; and (3) monitoring developments related to cryptoassets/technology-enabled innovation in financial services and assessing the implications for banks and supervisors.
The report confirms that the Financial Action Task Force (FATF) will report separately to the G20 on FATF’s work regarding cryptoasset money laundering and terrorist financing risks.