The Financial Stability Board (FSB) has published a report to set out a framework for monitoring the crypto-asset market.
It delivered the report to the G20 Finance Ministers and Central Bank Governors setting out the work of the FSB and standard-setting bodies on crypto-assets. According to the announcement, the FSB has been working in collaboration with the Committee on Payments and Market Infrastructures (CPMI) to develop a framework the agency will use to oversee crypto-asset markets.
The report sets out the metrics that the FSB will use to monitor crypto-asset markets as part of its ongoing assessment of vulnerabilities in the financial system.
While the FSB says crypto-assets do not pose a ‘material risk to global financial stability’ at this time, it recognises the need for ‘vigilant monitoring’ in light of the speed of market developments.
The monitoring framework focuses on the transmission channels from crypto-asset markets that may give rise to financial stability risks. It monitors the size and growth of crypto-asset markets to understand the potential size of wealth effects, should valuations fall.
Its framework also includes metrics on trading volumes, pricing, clearing and margining for crypto-asset derivatives. Metrics on exposures will become part of the framework to the extent that they become available according to FSB.
The report also describes the work standard-setting bodies are undertaking in the areas of their respective mandates. It claims CPMI has conducted significant work on applications of distributed ledger technology, while The International Organization of Securities Commissions (IOSCO) has established an initial coin offering (ICO) Consultation Network to review experiences and issues in the ICO market.
The Basel Committee on Banking Supervision (BCBS) is also assessing the materiality of banks’ direct and indirect exposures to crypto-assets.
Obi Nwosu, CEO and co-founder of Coinfloor, recently told RegTech Analyst that despite recent advancements in market regulation for cryptos being ‘an encouraging sign’, more legislation is needed to add additional safeguards.
“Recent advancements in market regulation have left us encouraged of things to come,” Nwosu said. “The introduction of appropriate regulation, infrastructure and technological solutions will help cryptocurrencies achieve their full potential in delivering both social and economic benefits as originally intended.”
Copyright © 2018 RegTech Analyst
Copyright © 2018 RegTech Analyst
