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- The FSB is G20’s global standard setter; the IMF is the global economic agency.
- India, which is hosting the G20 presidency until December 2023, has requested the paper.
The Financial Stability Board (FSB) and the International Monetary Fund (IMF) are going to introduce a joint paper on global crypto policy, FSB Chair Klaas Knot wrote in a letter to G20 leaders on 5 September.
The said paper will outline a roadmap on the implementation of policy frameworks for crypto, including global coordination, cooperation, and information sharing.
India, which is hosting the G20 presidency until December 2023, has requested the paper. The country is hoping to build a global consensus on a roadmap for crypto.
The Indian government had been pushing to include in the paper concerns around macro-financial risks that emerging and developed economies might face due to risks posed by the crypto sector.
Knot’s letter mentions that the paper fulfills the requirement for a comprehensive policy response to the risks posed by the crypto sector. The sector requires close monitoring, given the growing links between crypto and the wider financial system.
The paper will go live on 7 September.
Preparing for crypto policy document
The body has been preparing to lay down recommendations for regulating the crypto industry since 2022. The year saw the collapse of major crypto firms like Terraform Labs, FTX, and Three Arrows Capital.
In October 2022, the FSB published a series of reports and documents around crypto assets. The watchdog argued that since crypto assets perform similar economic functions as products from traditional finance, they should be subject to similar regulations.
It also called for virtual assets like stablecoins to be held at high regulatory standards, given their influence on the broader crypto market.
In July 2023, the FSB revised its existing recommendations in a report. It called for tougher rules on safeguarding clients’ crypto assets and avoiding conflicts of interest.
2023 also saw the collapse of the Silvergate Bank, the Silicon Valley Bank, and the Signature Bank in March. But the IMF had already shared a report with G20 member states during their meeting held in New Delhi the previous month.
The report emphasized that the widespread adoption of crypto assets could threaten the effectiveness of monetary policies.
Readers must rest assured that it will take a long time for all the member states to arrive at a common understanding around crypto.