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Cryptocurrencies do not pose a threat to global financial stability, but the diverse range of national regulatory regimes throughout the world continues to complicate efforts to establish an international legislative framework overseeing their use, the Financial Stability Board says in a new report. 

Also Read: Billion-Dollar Startups Flourishing in Switzerland’s ‘Crypto Valley’

In a document titled “Crypto-asset markets: Potential channels for future financial stability implications,” the FSB argues against an alarmist view of the perceived threat that cryptocurrencies may pose to financial markets throughout the world. It finds that “based on the available information, crypto-assets do not pose a material risk to global financial stability at this time.”

However, the Switzerland-based international body, which offers recommendations on the global financial system under the leadership of Bank of England Governor Mark Carney, nonetheless advises a cautious approach to the industry. “Vigilant monitoring is needed in light of the speed of market developments,” it says. “Should the use of crypto-assets continue to evolve, it could have implications for financial stability in the future.”

The FSB predicts that said risks may include “confidence effects and reputational risks to financial institutions and their regulators.” It also points to “risks arising from direct or indirect exposures of financial institutions,” as well as “risks arising if crypto-assets became widely used in payments and settlement.” In addition, the organization points to concerns about “market capitalization and wealth effects.”

The report is a follow-up to the FSB’s “March 2018 letter to G20 Finance Ministers and Central Bank Governors” and its July 2018 “summary of the work of the FSB and standard-setting bodies on crypto-assets.” It highlights a number of broader policy issues pertinent to crypto-assets, such as “the need for consumer and investor protection; strong market integrity protocols; anti-money laundering and combating the financing of terrorism (AML/CFT) regulation and supervision, including implementation of international sanctions; regulatory measures to prevent tax evasion; the need to avoid circumvention of capital controls; and concerns relating to the facilitation of illegal securities offerings.”

While noting that the board has pursued a number of “domestic supervisory, regulatory, and enforcement actions related to crypto-assets,” the report reiterates the FSB’s ongoing efforts to facilitate the development of an international regulatory framework pertaining to cryptocurrencies. However, it describes the current diversity of national crypto regulations as a potential barrier to the establishment of an international juridical apparatus for virtual currencies.

The report also states that “illiquidity, concentrated ownership, fragmented market structure, and other issues also make crypto-assets potentially susceptible to price manipulation.”

What is your response to the new FSB report? Share your thoughts in the comments section below!

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The post FSB: Crypto-Assets Not a Threat to Global Financial Order appeared first on Bitcoin News.

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